In the view of UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia, further retracement in AUD/USD appears on the table while below 0.6630.

Key Quotes

24-hour view: “We indicated last Friday that ‘downward pressure has eased somewhat but AUD could drop towards the 0.6600 level again before a more sustained recovery is likely’. However, after dropping to 0.6618, AUD rebounded to a high of 0.6675 and then closed at 0.6651 (+0.45%). Downward pressure has eased and AUD has likely entered a consolidation phase. Today, AUD is likely to trade sideways between 0.6630 and 0.6680.”

Next 1-3 weeks: “In our latest narrative from last Friday (19 May, spot at 0.6630), we noted that ‘downward momentum has not improved much’ but we see a chance for AUD to drop to 0.6575. AUD dropped to 0.6618, rebounded and then closed at 0.6651 (+0.45%). Short-term downward momentum is beginning to ease and AUD has to break and stay below 0.6630 in the next 1-2 days or the chance of it declining further to 0.6575 will fizzle out. Conversely, a clear breach of 0.6685 (no change in ‘strong resistance’ level from last Friday) would indicate that AUD is not weakening further.”