AUD/USD risks a potential drop to 0.7480 – UOB

In opinion of FX Strategists at UOB Group, AUD/USD could slip back to the 0.7480 region in the next weeks.

Key Quotes

24-hour view: “We expected a lower AUD yesterday but we were of the view that ‘any weakness is expected to encounter strong support at 0.7540’. We were also of the view that ‘the next support at 0.7520 is unlikely to come under threat’. The subsequent weakness exceeded our expectation as AUD dropped to 0.7508 before closing on a weak note at 0.7513. While oversold, there is room for the weakness in AUD to test 0.7500 first. The next support at 0.7480 is unlikely to come into the picture. On the upside, a break of 0.7545 (minor resistance is at 0.7530) would indicate that the current weakness in AUD has stabilized.”

Next 1-3 weeks: “We have held the same view since last Friday (25 Jun, spot at 0.7585) where AUD is ‘is expected to trade within a 0.7520/0.7650 range’. We did not quite expect the rapid manner by which AUD dipped below the bottom of our expected range (overnight low of 0.7508). Downward momentum has improved and AUD is expected to trade with a downward bias towards 0.7480. Looking ahead, AUD has to move clearly below 0.7480 before a further weakness can be expected. The downward bias is deemed intact as long as AUD does not move above 0.7575 within these few days.”