AUD/USD: A deeper pullback emerges on the horizon – UOB

The Aussie dollar faces the probability of a deeper correction to the 0.6770 region vs. its American peer, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “AUD traded between 0.6828 and 0.6912 last Friday, relatively close to our expected range of 0.6825/0.6900. The soft daily closing in NY (0.6833, -0.28%) coupled with the weak price action upon opening this morning suggests the risk is on the downside. From here, barring a move above 0.6875 (minor resistance at 0.6845), AUD could dip below 0.6800. At this stage, the odds for a sustained decline below this level are not high (next support is at 0.6775).”

Next 1-3 weeks: “We have held the same view since last Tuesday (16 Jun, spot at 0.6940) wherein AUD is expected to trade between 0.6800 and 0.7050. AUD traded in a relatively quiet manner for several days but is currently approaching the bottom of the expected range at 0.6800. Downward momentum has picked up, albeit not by much. In other words, it is too early to expect a sustained a decline. That said, only a move above 0.6910 would indicate the current mild downward pressure has eased. Looking forward, if AUD closes below 0.6775, it would suggest the start of a deeper pull-back towards 0.6700.”