AUD/USD: Downward momentum improves – UOB

FX Strategists at UOB Group noted AUD/USD could grind lower on a close below the 0.7675 level in the near-term.

Key Quotes

24-hour view: “We highlighted last Friday that AUD ‘has scope to dip below 0.7720’ but we were of the view that ‘the next support at 0.7700 is likely safe for now’. While our view was not wrong as the decline in AUD stalled at 0.7718, AUD opened on a soft note today and the risk is for AUD to weaken further. However, the major support at 0.7675 is unlikely to come under threat. Resistance is at 0.7755 but the stronger level is at 0.7775.”

Next 1-3 weeks: “We highlighted last Friday (19 Mar, spot at 0.7755) that AUD ‘is likely to trade between 0.7675 and 0.7820’. While there is no change in our view, shorter-term downward momentum is beginning to improve. That said, the bottom of the expected range at 0.7675 is a solid support and AUD has to close below this level before further weakness can be expected. At this stage, the prospect such a move is not high but it would increase further unless AUD moves back above 0.7795 within these few days. Looking ahead, the next support below 0.7675 is at the month-to-date low near 0.7620.”