Chance for Australian Dollar (AUD) to drop further; given the deeply oversold conditions, a sustained decline below 0.6080 appears unlikely today. In the longer run, AUD is under pressure; it is too early to determine if there is enough momentum for it to drop towards 0.6000, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Not enough momentum for AUD to drop towards 0.6000

24-HOUR VIEW: “While further AUD declines appear likely in the coming days, the sharp plunge today appears to be overdone. That said, there is a chance for AUD to drop further, but given the deeply oversold conditions, a sustained decline below 0.6080 appears unlikely today. The 0.6045 support level is also unlikely to come under threat. On the upside, any recovery is likely to remain below 0.6205, with 0.6185 providing strong resistance.”

1-3 WEEKS VIEW: “After recovering to a high of 0.6330 late last month, AUD fell sharply. Today, it fell below last month’s low of 0.6131, reaching levels not seen since Apr 2020. The price action suggests further AUD weakness, but it is too early to determine if there is enough momentum for AUD to drop towards the significant support level at 0.6000. Overall, we expect AUD to remain under pressure, as long as it remains below 0.6230.”