Potential for the Australian Dollar (AUD) to decline to 0.6500; the likelihood of a sustained break below this level is not high, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

A breach of 0.6640 to push AUD higher

24-HOUR VIEW: “After AUD fell sharply early yesterday, we indicated that it ‘could drop further but a break of the major support at 0.6535 is unlikely.’ We underestimated the downward momentum, as AUD fell to a three-month low of 0.6513. AUD recovered swiftly from the low, closing at 0.6571, down by 1.00% for the day. The bounce from the low has resulted in a slowdown in momentum. This, combined with oversold conditions, suggests that AUD is unlikely to weaken further. Today, it is more likely to trade in a range, probably between 0.6530 and 0.6610.”

1-3 WEEKS VIEW: “Our most recent narrative was from Monday (04 Nov, spot at 0.6585), wherein the recent ‘month-long AUD weakness has stabilised,’ and AUD is expected to ‘trade in a 0.6535/0.6655 range for now.’ Yesterday (Wednesday), it touched 0.6645, then reversed abruptly and plummeted to a low of 0.6513. Despite the decline, there has been no significant increase in momentum. That said, there is potential for AUD to decline to 0.6500. Currently, the likelihood of a sustained break below this level is not high. On the upside, a breach of 0.6640 would mean that AUD is not weakening further.”