AUD/USD risks extra pullbacks – UOB

FX Strategists at UOB Group do not rule out further weakness around the Aussie Dollar in the near term.

Key Quotes

24-hour view: “We expected AUD to ratchet lower to 0.7535 but it only managed to touch a low of 0.7547. Indicators remain at rather oversold level but with no sign of stabilization just yet, we continue to see chance for AUD to grind lower to 0.7535. At this stage, we do not expect the next support at 0.7500 to come into the picture. On the upside, stabilization is only upon a move above 0.7605 (minor resistance is at 0.7585)”.

Next 1-3 weeks: “We noted yesterday that “there is no sign of stabilization just yet” and “we have to contend with further weakness to 0.7550”. AUD subsequently hit a low of 0.7553 before staging a mild recovery. While further weakness is not ruled out, the combination of oversold conditions and waning momentum suggest that the odds for a sustained move below 0.7550 are not high. The next support below 0.7550 is at 0.7500, the low in December last year. At this stage, it appears that AUD would likely make a short-term low ahead of this major support. To put it another way, 0.7500 is likely out of reach this time round. Resistance is at 0.7605 but only a break of 0.7650 (‘key resistance’ previously at 0.7690) would indicate that a short-term low is in place”.