Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group suggest AUD/USD could revisit the 0.6575 level while below 0.6630.

Key Quotes

24-hour view: “Last Friday, we highlighted that ‘barring a break above 0.6745, AUD could drop further to 0.6670 before stabilization is likely’. We added, ‘the major support at 0.6630 is not expected to come under threat’. AUD fell more than expected as it came close to breaking 0.6630 (low has been 0.6637). Today, AUD could break dip 0.6630 but in view of the severely oversold conditions, it is not expected to challenge the major support at 0.6575. On the upside, a breach of 0.6695 (minor resistance is at 0.6675) indicates AUD is not weakening further.”

Next 1-3 weeks: “We indicated last Friday (15 May, spot at 0.6705) that the recent AUD strength had ended. We highlighted that ‘for the time being, the bias is tilted to the downside but we view any AUD weakness as part of a 0.6630/0.6780 range’ and ‘a sustained drop below 0.6630 is unlikely for now’. We did not quite expect the sharp drop in AUD as it fell close to 0.6630 (low of 0.6637). From here, AUD has to break and stay below 0.6630 before a sustained decline to 0.6575 is likely. The odds of AUD breaking clearly below 0.6630 will remain intact as long as it stays below 0.6725 (the level of ‘strong resistance’ now).”