AUD/USD: AUD can break and remain below 0.6350 – UOB Group

The Australian Dollar (AUD) could weaken further; given the deeply oversold conditions, it remains to be seen if it can break below 0.6350. In the longer run, AUD has to break and remain below 0.6350 before further decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Below 0.6350 further decline can be expected

24-HOUR VIEW: “We did not expect AUD to plummet to 0.6366 yesterday (we were expecting range trading). Further weakness is not ruled out, but given the deeply oversold conditions, it remains to be seen if AUD can break below 0.6350. On the upside, a breach of 0.6420 (minor resistance is at 0.6395) would indicate that the current downward pressure has eased.”

1-3 WEEKS VIEW: “We revised our view from negative to neutral yesterday (10 Dec, spot at 0.6440), indicating that ‘the current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500.’ We did not anticipate AUD to drop to 0.6366. While downward momentum is beginning to build again, it is not enough to signal a sustained decline. AUD has to break and remain below the significant support at 0.6350 before further weakness can be expected. The probability of AUD breaking clearly below 0.6350 will remain in place as long as 0.6445 is not breached. Looking ahead, the next support level below 0.6350 is at 0.6310.”