The continuation of the downtrend could force AUD/USD to slip back to the 0.6820 region in the short term, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We expected AUD to trade sideways between 0.6865 and 0.6940 yesterday. AUD rose to 0.6937 before dropping to a low of 0.6841 in early NY trade. Downward momentum has increased and AUD is likely to weaken further. However, the likelihood of a sustained decline below the major support at 0.6820 is low. Resistance is at 0.6895 but only a break of 0.6920 would indicate that AUD is not weakening further.”

Next 1-3 weeks: “Yesterday (16 Feb, spot at 0.6910), we highlighted that ‘downward momentum is building but AUD has to break below 0.6865 before a sustained decline is likely’. In NY trade, AUD fell below 0.6865 to 0.6841. Downward momentum has improved further and AUD is likely to weaken to 0.6820. Looking ahead, the next support below 0.6820 is at 0.6750. Overall, only a breach of 0.6950 (‘strong resistance’ level was at 0.6970) would indicate that the build-up in downward momentum has faded.”