AUD/USD faces extra retracements below 0.7400 – UOB

AUD/USD risks a deeper pullback if the 0.7400 level is breached in the near term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected AUD to ‘trade between 0.7450 and 0.7500’ yesterday. AUD subsequently rose to 0.7504 before plummeting to 0.7427 during early NY hours. Despite the rapid decline, downward momentum has not improved by much and AUD is unlikely to weaken further. For today, AUD is more likely to trade between 0.7430 and 0.7480.”

Next 1-3 weeks: “We have expected a weaker AUD since last week. After AUD rebounded strongly from 0.7410, we indicated on Monday that ‘downward momentum has waned considerably and the prospect for AUD to break 0.7400 has diminished’. AUD rose above our ‘strong resistance’ level of 0.7500 yesterday (high of 0.7504) before dropping back down. While the bias still appears to be tilted to the downside, AUD has to close below 0.7400 before a sustained decline can be expected. Meanwhile, it could trade within a 0.7400/0.7500 range.”