24-hour view: After AUD plunged sharply to 0.6528 on Wednesday, we highlighted yesterday that “there is a chance for AUD to dip below 0.6500.” Our expectations did not materialise as AUD dipped to 0.6514 before recovering. Oversold conditions, coupled with early signs of slowing momentum, suggest low downside risk. Today, AUD is likely to trade in a range, probably between 0.6530 and 0.6595.

Next 1-3 weeks: We continue to hold the same view as yesterday (03 Aug, spot at 0.6535). As highlighted, while the AUD weakness that started early last week is severely oversold, AUD could weaken further to the year’s low near 0.6460. Overall, only a breach of 0.6620 (‘strong resistance’ was at 0.6635 yesterday) would indicate that AUD is not weakening further.