FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang note the downside pressure around AUD/USD remains unchanged in the very near term.

Key Quotes

24-hour view: “Last Friday, we indicated that ‘downward momentum has improved, albeit not by much’ and we held the view that ‘there is room for AUD to drop below 0.6680 but the next support at 0.6640 is unlikely to come under threat’. Our view turned out to be correct as AUD dropped to 0.6670 before rebounding quickly. The rebound amidst oversold conditions suggests AUD is unlikely to weaken further. For today, AUD is more likely to range-trade, expected to be between 0.6680 and 0.6750.”

Next 1-3 weeks: “In our latest narrative from last Friday (16 Sep, spot at 0.6700), we highlighted that ‘downward momentum is improving quickly and a break of 0.6680 would not be surprising and would shift the focus to 0.6640’. AUD subsequently took out 0.6680, dropped to 0.6670 before rebounding to close higher by +0.31%. While we continue to expect AUD to weaken, oversold shorter-term conditions could lead to a couple of days of consolidation first. Overall, only a breach of 0.6770 (no change in ‘strong resistance’ level from last Friday) would indicate that AUD is unlikely to weaken further.”