Australian Dollar: Looking for 0.7100 break against US Dollar – UOB

Quek Ser Leang at UOB notes AUD/USD fell more sharply than anticipated to 0.7109, leaving short-term conditions oversold and favouring consolidation between 0.7110 and 0.7155 intraday. The bank maintains a negative 1–3 week bias, stating AUD must close below 0.7100 to open 0.7050, while resistance at 0.7175 limits upside. Earlier, UOB had flagged downside potential toward 0.7120.

Australian Dollar remains under pressure

"24-HOUR VIEW: After our expectation that AUD would decline to 0.7140 did not materialise last Friday, we indicated yesterday that “the underlying tone remains soft, and we continue to expect AUD to test 0.7140.” We also highlighted that “a break below this level is not ruled out, but the major support at 0.7120 is unlikely to come into view.” Our call for AUD to weaken was not wrong, but we did not anticipate the sharp drop that reached a low of 0.7109. The decline appears to be overdone, and AUD is unlikely to weaken much further. Today, AUD is more likely to consolidate between 0.7110 and 0.7155."

"1-3 WEEKS VIEW: We turned negative on AUD last Friday (11 Sep, spot at 0.7160). We highlighted that following the sharp decline on Thursday, “the rapid increase in downward momentum indicates that AUD could decline toward 0.7120.” Yesterday, AUD fell below 0.7120 as it dropped to a low of 0.7109. While further weakness is not ruled out, short-term conditions are oversold, and AUD must close below 0.7100 before a move to 0.7050 can be expected. The likelihood of AUD closing below 0.7100 will remain intact as long as AUD holds below the ‘strong resistance’ at 0.7175 (level previously at 0.7210)"

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