In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, the idea of further downside in AUD/USD seems to be losing momentum in the short term.

Key Quotes

24-hour view: “Last Friday, we highlighted that AUD ‘is likely to weaken further but the likelihood of a sustained decline below the major support at 0.6820 is low’. While our view was not wrong as AUD dropped to 0.6817, we did quite anticipate the sharp rebound from the low as AUD closed little changed at 0.6879 (-0.01%). Not surprisingly, downward pressure has eased. We view the current movement as part of a consolidation and expect AUD to trade sideways between 0.6850 and 0.6915.”

Next 1-3 weeks: “We highlighted last Friday (17 Feb, spot at 0.6865) that ‘downward momentum has improved further and AUD is likely to weaken to 0.6820’. Our view was not wrong as AUD dropped to 0.6817 but we did not expect the rapid rebound from the low. Downward momentum is beginning to wane and the chance for AUD to drop below 0.6820 in a sustained manner has decreased. However, only a breach of 0.6950 (no change in ‘strong resistance’ level from last Friday) would indicate that the risk of a sustained drop below 0.6820 has fizzled out.”