AUD/USD could drop to 0.6850 in case 0.6900 is cleared in the next weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted last Friday that ‘despite the advance, upward momentum has not improved by much and AUD is unlikely to strengthen much further’ and we expected AUD to ‘trade between 0.6970 and 0.7070’. However, AUD plummeted to a low of 0.6898 before rebounding. The rebound amidst oversold conditions suggests that AUD has likely moved into a consolidation phase. In other words, AUD is likely to trade sideways for today, expected to between 0.6900 and 0.7010.”

Next 1-3 weeks: “Last Thursday (16 Jun, spot at 0.7020), we highlighted that the recent weak phase in AUD has ended. We expected AUD to consolidate and trade between 0.6900 and 0.7100. Last Friday, AUD dropped a couple of pips below the bottom of our expected (low 0.6898). There is no change in our view for now and only a daily closing below 0.6900 would indicate that AUD is ready to move to 0.6850. At this stage, the odds for AUD to close below 0.6900 is not high.”