Provided that Australian Dollar (AUD) remains below 0.6245, it could test the major support of 0.6180 before a rebound is likely. In the longer run, AUD must break and remain below 0.6180 before further weakness can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Likelihood of AUD breaking clearly 0.6180 is not high
24-HOUR VIEW: “When AUD was trading at 0.6230 in early Asian trade yesterday, we noted ‘a slight increase in downward momentum.’ However, we held the view that ‘this is likely to result in a lower trading range of 0.6215/0.6265 instead of a sustained decline.’ In London trade, AUD fell sharply, but briefly, to 0.6188. It rebounded from the low to close at 0.6216 (-0.24%). The increase in downward momentum is not enough to suggest a sustained decline. However, provided that AUD remains below 0.6245 (minor resistance is at 0.6225), it could test the major support at 0.6180 before another rebound is likely.”
1-3 WEEKS VIEW: “We highlighted on Tuesday (07 Jan, spot at 0.6240) that AUD ‘may have found an interim bottom at 0.6179 last week.’ However, we noted that ‘as there has been no significant increase in upward momentum, AUD is likely to trade in a range for the time being, expected to be between 0.6180 and 0.6310.’ Yesterday (Wednesday), AUD dropped briefly to 0.6188. Although the price action has resulted in an increase in momentum, AUD must break and remain below 0.6180 before further weakness can be expected. Currently, the likelihood of AUD breaking clearly 0.6180 is not high, but it will remain intact as long as 0.6265 is not breached in the next few days.”
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