Australian Dollar (AUD) is expected to trade in a 0.6350/0.6410 range. In the longer run, AUD has to break and remain below 0.6350 before further decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD can break and remain below 0.6350

24-HOUR VIEW: “AUD dropped to 0.6337 two days ago and then rebounded. Yesterday, when AUD was at 0.6380, we pointed out that ‘the rebound in oversold conditions and slowing momentum suggests that AUD is likely to trade in a range today, probably between 0.6355 and 0.6415.’ The subsequent price movements did not turn out as we expected, with AUD rising to 0.6430 before declining to 0.6362. AUD closed unchanged at 0.6369. The price action provides no fresh clues, and today, we expect AUD to trade in a 0.6350/0.6410 range.”

1-3 WEEKS VIEW: “On Wednesday (11 Dec, spot at 0.6380), we highlighted that ‘while downward momentum is beginning to build again, it is not enough to suggest a sustained decline.’ We also highlighted that AUD ‘has to break and remain below the significant support at 0.6350 before further weakness can be expected.’ Yesterday, AUD closed unchanged at 0.6369. There has been no further increase in downward momentum, and we continue to hold the same view for now. Overall, only a breach of 0.6430 (no change in ‘strong resistance’ level) would mean that the chance of AUD breaking clearly below 0.6350 has dissipated.”