24-hour view: We highlighted last Friday that AUD “is under mild downward pressure and could dip below 0.6750.” However, we were of the view that “a sustained decline below this level is unlikely.” AUD weakened more than expected as it dropped to 0.6723 before closing on a soft note at 0.6732 (-0.70%). The rapid decline has room to extend. In view of the oversold conditions, a sustained decline below the major support at 0.6700 is unlikely. Resistance is at 0.6755, followed by 0.6775.

Next 1-3 weeks: Our latest narrative was from last Thursday (20 Jul, spot at 0.6775). In the update, we highlighted that “the recent buildup in upward momentum has dissipated” and we expected AUD to trade in a range between 0.6700 and 0.6865. On Friday, AUD fell to a low of 0.6723. Downward momentum is beginning to build and, if AUD breaks below 0.6700, it could continue to weaken to 0.6665. The downward pressure is intact as long as AUD stays below the ‘strong resistance’ level, currently at 0.6800.