AUD/USD: Downside pressure looks alleviated – UOB

Further retracement in AUD/USD seems out of favour in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that ‘there is room for AUD dip below 0.7450 but it is unlikely able to maintain a foothold below this level’. While our view was not wrong as AUD dipped to 0.7445, we did not anticipate the sharp bounce from the low (high has been 0.7533). The rapid bounce appears to be overdone and AUD is unlikely to strengthen much further. For today, AUD is more likely to trade between 0.7490 and 0.7540.”

Next 1-3 weeks: “We have expected AUD to weaken since the middle of last week. In our latest narrative from last Friday (02 Jul), we indicated that AUD ‘is still under pressure and the next support is at 0.7450’. We added, AUD ‘is expected to stay under pressure unless it can move above 0.7530’. While AUD subsequently dropped below 0.7450 (low of 0.7445), it snapped back up to a high of 0.7533. The breach of our ‘strong resistance’ level at 0.7530 indicates that downward pressure has eased. The current movement is viewed as the early stages of a consolidation phase and AUD is expected to trade within a 0.7470/0.7570 range for now.”