FX Strategists at UOB Group note AUD/USD remains under pressure and could drop to 0.6765 in the next weeks.
- "24-hour view: AUD plunged to a low of 0.6770, just a few pips above the major 0.6765 support level. The rapid decline is severely over-extended and further sustained weakness is not expected for today. That said, it is too soon to expect a recovery. AUD is more likely to consolidate and trade sideways at these lower levels, expected to be within a 0.6765/0.6810 range.
- Next 1-3 weeks: We held the view yesterday (14 Nov, spot at 0.6810) that the “risk is on the downside but any weakness is likely limited to 0.6765”. AUD subsequently extended its decline and plummeted to 0.6770. While the price action has resulted in a rapid improvement in momentum, longer-term conditions are still rather oversold and the prospect for a sustained decline below 0.6765 is still not that high. That said, AUD is expected to remain on the back foot unless it can move back above 0.6845 (‘strong resistance’ level was at 0.6860 yesterday). Looking forward, if AUD were to move clearly 0.6765, it would likely face another solid support at 0.6725."