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- AUD/USD: Extra weakness likely below 0.6280 – UOB
AUD/USD: Extra weakness likely below 0.6280 – UOB
In the opinion of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, AUD/USD risks further losses if it breaches 0.6280.
Key Quotes
24-hour view: While we expected AUD to weaken yesterday, we indicated that “oversold conditions suggest that it might not break clearly below 0.6330.” The anticipated AUD weakness exceeded our expectations as it plunged to a low of 0.6286 before recovering slightly. Conditions remain severely oversold; this, combined with tentative signs of slowing momentum, suggests AUD is unlikely to weaken much further. Today, AUD is more likely to trade sideways, probably between 0.6280 and 0.6350.
Next 1-3 weeks: Yesterday (03 Oct), when AUD was trading at 0.6365, we indicated that “downward momentum has built quickly.” We highlighted that AUD “is likely to weaken to 0.6330, possibly 0.6280.” We did quite expect the sharp and swift drop as AUD fell to a low of 0.6286 in NY session. The swift decline appears to be overstretched, but with no signs of stabilisation yet, AUD could continue to weaken. That said, it must break and stay below 0.6280 before further decline is likely (the next level to watch is 0.6230). The risk of AUD breaking clearly below 0.6280 will remain intact as long as it stays below 0.6400 (‘strong resistance’ level was at 0.6430 yesterday).
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