In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, AUD/USD still risks further downside to probably 0.7030 in the next weeks.

Key Quotes

24-hour view: “The sharp drop in AUD to 0.7094 and the subsequent weak closing at 0.7097 (-1.29%) came as a surprise (we were expecting sideway trading). While oversold, the rapid drop has scope to extend to 0.7060. The major support at 0.7030 is unlikely to come into the picture for now. On the upside, 0.7150 is likely strong enough to contain any rebound (minor resistance is at 0.7125).”

Next 1-3 weeks: “Two days ago (07 Jun, spot at 0.7190), we highlighted that the recent AUD strength has come to an end and we held the view that AUD is likely to consolidate and trade between 0.7100 and 0.7260. Yesterday (09 Jun), AUD dipped below 0.7100 (low of 0.7094). Downward momentum has improved and instead of consolidating, AUD could decline to 0.7030. At this stage, the chance for a sustained decline below this level is not high. The downside risk is intact as long as AUD does not move above the ‘strong resistance’ level, currently at 0.7180.”