Australian Dollar: Short-term downside toward 0.7050 against US Dollar – UOB

FXStreet Insights Team FXStreet

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD dropped to 0.7075 and closed at 0.7087 after an overdone decline. For the next 24 hours, the pair is expected to stay within 0.7070–0.7115 with risks still skewed lower. On a 1-3 week horizon, they maintain a negative stance, looking for a move toward 0.7050 unless resistance at 0.7140 is reclaimed.

Australian Dollar remains under downside risk

"24-HOUR VIEW: Following Tuesday’s price action, we noted yesterday that “downward momentum has increased, albeit slightly,” and we indicated that AUD “could edge lower, but any decline should stay within a 0.7100/0.7140 range.” During the NY session, AUD briefly popped to a high of 0.7140 and then plunged below 0.7100, printing a low of 0.7075. The sharp decline appears to be overdone, but with no signs of stabilisation just yet, the risk remains on the downside today. However, this time around, AUD is likely to stay within a 0.7070/0.7115 range."

"1-3 WEEKS VIEW: We turned negative on AUD last Friday (11 Sep, spot at 0.7160). We indicated that AUD “could decline toward 0.7120.” After AUD broke below 0.7120 and fell to 0.7109, we highlighted two days ago (15 Sep, spot at 0.7135) that “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.” Yesterday, AUD broke below 0.7100 and closed at 0.7087 (-0.64%). From here, we expect AUD to drop to 0.7050. Overall, only a breach of 0.7140 (‘strong resistance’ level previously at 0.7175) would mean that AUD is stabilising."

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

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FXStreet Insights Team

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