AUD/USD seen correcting lower near term – UOB

AUD/USD is expected to trade lower in the next sessions, although a break below 0.6910 looks unsustainable for the time being, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we expected AUD to “dip below 0.6960” but held the view that “a sustained decline below this level is not expected”. We highlighted the “next support is at 0.6940”. AUD subsequently dropped to 0.6943 before ending the day on a soft note at 0.6953. The weakness in AUD over the past several days appears to be running ahead of itself and while a dip below 0.6940 would not be surprising, the next support at 0.6910 is not expected to come into the picture (another minor support at 0.6925). All in, AUD is expected to stay under pressure unless it can move and stay above 0.6975”.

Next 1-3 weeks: “The price action over the past couple of days is in line with our view from Wednesday (24 Jul, spot at 0.7000) wherein AUD is expected to “trade with a downside bias towards 0.6940”. AUD dropped to an overnight low of 0.6943 and the 5-day decline from last week’s 0.7083 peak appears to be severely overextended. That said, AUD has to move above the 0.7005 ‘key resistance’ (level was previously at 0.7035) in order to indicate that the current weakness has stabilized. Until then, AUD could weaken further but in view of the oversold conditions, the prospect for a break of the mid-July low of 0.6910 is not high”.