AUD/USD: A drop to 0.7100 looks likely – UOB

AUD/USD could still slip back to the 0.7100 zone in the next weeks, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “Last Friday, we held the view that ‘further AUD weakness is not ruled out but a clear break of the major support at 0.7100 appears unlikely’. Our view was not wrong as AUD rebounded after touching 0.7107. Downward pressure has eased and the current movement is likely part of consolidation phase. For today, AUD is likely to trade sideways between 0.7115 and 0.7170.”

Next 1-3 weeks: “We indicated last Friday (20 Aug, spot at 0.7150) that ‘while shorter-term conditions are oversold, the still strong downward momentum suggests AUD could weaken further to 0.7100’. AUD subsequently dropped to 0.7107 before rebounding. AUD is expected to stay under pressure and only a break of 0.7205 (‘strong resistance’ level was at 0.7240 last Friday) would indicate that AUD is unlikely to weaken further.”