Further downside in AUD/USD could drag the pair to the 0.6840 region in the next weeks, comment FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “The outsized sell-off in AUD came as a surprise (we were expecting AUD to trade sideways). AUD dropped to 0.6913 before extending its decline during early Asian hours. While oversold, the weakness in AUD has not stabilized. AUD could weaken further but in view of the oversold conditions, a break of the major support at 0.6840 is unlikely (there is another support at 0.6870). Resistance is at 0.6930 followed by 0.6960.”

Next 1-3 weeks: “After AUD rose to 0.7048, we highlighted yesterday (02 Aug, spot at 0.7025) that upward momentum has not improved. We added, ‘AUD has to break the major resistance at 0.7070 before a sustained advance is likely’. AUD did not break 0.7070 but instead dropped sharply to a low of 0.6913 during NY session before extending its decline during early Asian hours. The rapid build-up in downward momentum suggests AUD is likely to trade with a downward bias towards 0.6840. On the upside, a break of 0.6990 (‘strong resistance’ level) would indicate that the downside risk has dissipated.”