AUD/USD: A drop to 0.6300 appears on the cards – UOB

Further weakness could drag AUD/USD to the 0.6300 region in the near term, suggest UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: Yesterday, we highlighted that “mild downward pressure could lead to AUD edging lower.” We also highlighted that “any decline is highly unlikely to reach the major support at 0.6350.” In NY trade, AUD dropped sharply to a low of 0.6364 before ending the day on a soft note at 0.6366 (-0.56%). While the sharp decline is approaching oversold levels, there is no sign of stabilisation just yet. Today, AUD is likely to break below 0.6350, but it is unlikely to reach the major support at 0.6300. In order to keep the momentum going, AUD must stay below 0.6400 (minor resistance is at 0.6385). 

Next 1-3 weeks: Our most recent narrative was from two days ago (08 Nov, spot at 0.6435), wherein the recent buildup in upward momentum has faded and AUD is likely to trade in a range between 0.6350 and 0.6525. Yesterday, AUD dropped sharply to 0.6364. Downward momentum is beginning to build, and AUD is likely to trade with a downward bias to 0.6300. The downward bias is intact as long as AUD stays below 0.6440.