AUD/USD: A deeper pullback to 0.6930 appears unlikely – UOB

AUD/USD’s outlook points to further weakness, but a visit to the 0.6930 level is not favoured for the time being.

Key Quotes

24-hour view: “AUD closed little changed last Friday (0.7029, +0.01%) but opened on a soft note this morning. Downward momentum is beginning to improve and the bias is tilted to the downside. In view of the nascent build-up in momentum, any weakness is likely limited to a test of the support at 0.6980. The next support at 0.6955 is not expected to come into the picture today. Resistance is at 0.7040 followed by 0.7070.”

Next 1-3 weeks: “We left off last Thursday (29 Oct, spot at 0.7065) where we indicated that ‘near-term risk is on the downside but AUD has to close below 0.7005 before further weakness can be expected’. AUD subsequently dropped to a low of 0.7003 and while AUD did not close below 0.7005, downward momentum has improved and AUD could weaken from here. That said, 0.6930 is a major and solid support level and may not come into the picture so soon, if at all (there is another support at 0.6955). All in, AUD could not afford to dither around current level or the build-up in momentum would fizzle out quickly. A break of 0.7100 (‘strong resistance’ level) would also indicate that AUD is not ready for 0.6930 just yet.”