UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang suggest further downside is likely in AUD/USD in the next few weeks.

Key Quotes

24-hour view: “While we expected AUD to weaken yesterday, we were of the view that ‘any decline is expected to face solid support at 0.6695’. The anticipated support did not materialize as AUD nosedived to a low of 0.6580. The outsized decline appears to be overdone but AUD could drop to 0.6550 before stabilization is likely. The next support at 0.6500 is unlikely to come into view today. On the upside, any rebound is likely to stay below 0.6665 (minor resistance is at 0.6625).”

Next 1-3 weeks: “We have expected AUD to consolidate between 0.6695 and 0.6820 since two days ago. Yesterday (07 Mar, spot at 0.6760), we highlighted that ‘Looking ahead, if AUD were to break and stay below 0.6695, it would suggest the weakness in AUD has resumed’. That said, we did not expect the outsized drop as AUD cracked several strong support levels and nosedived to a low of 0.6580. While the price actions suggest AUD is likely to weaken further, any weakness is likely to be at a slower pace, and the major support at 0.6500 may not come into view so soon. The downside risk is intact as long as AUD stays below 0.6700 (‘strong resistance’ level) in the next few days.”