AUD/USD: Extra losses seen once 0.7290 is cleared – UOB

AUD/USD risks further pullbacks on a break below the 0.7290 level, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for AUD to ‘test 0.7420 first before easing’ did not materialize as it rose to 0.7404 before pulling back (low has been 0.7332). The rapid pullback appears to be overdone and AUD is unlikely to weaken much further. For today, AUD is more likely to trade within a range of 0.7320/0.7370.”

Next 1-3 weeks: “We have expected AUD to ‘trade between 0.7320 and 0.7450’ since 23 Jul (spot at 0.7385). After trading within the expected range for more than a week, AUD dropped to 0.7332 last Friday. Downward momentum is beginning to improve and the prospect for a break of 0.7320 has increased. That said, AUD has to close below 0.7290 before a sustained decline can be expected. At this stage, the chance for AUD to close below 0.7290 is not high but it would remain intact as long as AUD does not move above the ‘strong resistance’ level (currently at 0.7395) within these few days.”