Further upside in AUD/USD could drag the pair to the 0.6680 region in the next weeks, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We expected AUD to ‘consolidate and trade between 0.6780 and 0.6840’ yesterday. AUD subsequently rose to 0.6832 before staging a surprisingly sharp sell-off to 0.6728. Not surprisingly, the sharp and swift decline is oversold but in view of the solid downward momentum, AUD could weaken further. That said, the next major support at 0.6680 (there is a minor support at 0.6705) is likely out of reach for today. On the upside, a break of 0.6775 (minor resistance is at 0.6755) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “Last Friday (02 Sep, spot at 0.6800), we highlighted that AUD is likely to weaken and a break of 0.6750 would shift the focus to 0.6705. As AUD struggled to head lower, we indicated yesterday that downward momentum has waned and a break of 0.6870 would indicate that AUD is unlikely to head below 0.6750. We did not anticipate the subsequent volatile price actions as AUD rose to 0.6832 before plummeting to crack 0.6750 (low of 0.6728). The boost in shorter-term downward momentum is likely to lead to further AUD weakness. The next support is at 0.6680. A break of 0.6680 could potentially trigger a rapid drop to 0.6600. Overall, AUD is expected to weaken as long as it does not move above 0.6800 (‘strong resistance’ level was at 0.6870 yesterday).”