Australian Dollar: 0.7000 support under pressure against US Dollar – UOB

UOB’s Quek Ser Leang and Lee Sue Ann report that AUD/USD spiked to 0.7071 before sliding to 0.7005 and closing at 0.7027. They see slightly stronger downside momentum but doubt a sustained break below 0.7000 in the very near term. Over the next one to three weeks, further declines require a clear move under 0.7000, with 0.6975 the next level to watch.

Downside risk builds but floor still holds

"24-HOUR VIEW: We expected AUD “to trade in a range between 0.7015 and 0.7065” yesterday. However, after rising to 0.7071, AUD fell sharply to a low of 0.7005 before recovering to settle 0.25% lower at 0.7027. Downward momentum has increased, but not much. Today, as long as AUD holds below 0.7060 (minor resistance is at 0.7040), it could test 0.7000 before another recovery can be expected. A sustained drop below 0.7000 appears unlikely, and the next support level at 0.6975 is also unlikely to come under threat."

"1-3 WEEKS VIEW: Last Thursday (04 Jun, spot at 0.7135), we highlighted that “there has been a tentative increase in downward momentum, and if AUD breaks and holds below 0.7120, it could lead to a drop to 0.7095.” After AUD sold off sharply on Friday, we highlighted on Monday (08 Jun, spot at 0.7040) that “the price action suggests that AUD could weaken to 0.7000.” While AUD dropped to a low of 0.7005 yesterday, there has been no further increase in downward momentum. From here, AUD must break and hold below 0.7000 before further declines can be expected. The likelihood of AUD breaking clearly below 0.7000 will remain intact as long as AUD holds below 0.7085 (‘strong resistance’ level previously at 0.7105). Looking ahead, the next level to monitor below 0.7000 is 0.6975."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)