Extra losses in AUD/USD could re-visit the 0.7105 level in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected AUD to weaken last Friday but we were of the view that ‘any weakness is expected to encounter strong support at 0.7140’. The subsequent weakness exceeded our expectations as AUD plummeted to 0.7113 before rebounding. The combination of oversold conditions and waning momentum indicates that AUD has likely moved into a consolidation phase. In other words, AUD is likely to trade sideways for today, expected to be between 0.7115 and 0.7160.”

Next 1-3 weeks: “We have expected AUD to weaken since early last week. In our latest narrative from last Friday (26 Nov, spot at 0.7170), we indicated that there is room for AUD to weaken further but it is too early to tell if AUD could move to the year-to-date low near 0.7105. AUD subsequently dropped to 0.7113. Downward momentum has improved and a break of 0.7105 would not be surprising. That said, deeply oversold conditions suggest that AUD may not be able to maintain a foothold below this level. Overall, the current AUD weakness is deemed intact as long as it does not move above 0.7205 (‘strong resistance’ level was at 0.7235 last Friday).”