Australian Dollar: Gradual grind lower toward 0.6975 – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann maintain a negative stance on AUD/USD after the pair closed below 0.7000, though downside momentum is still described as modest. Intraday, they look for further slippage but doubts a clean break of 0.6975. Over 1–3 weeks, price action is seen grinding toward 0.6975, with 0.7060 now the strong resistance.

Downside bias but limited momentum

"24-HOUR VIEW: After AUD dropped to a low of 0.7005 two days ago, we highlighted the following yesterday: “Downward momentum has increased, but not much. Today, as long as AUD holds below 0.7060 (minor resistance is at 0.7040), it could test 0.7000 before another recovery can be expected. A sustained drop below 0.7000 appears unlikely, and the next support level at 0.6975 is also unlikely to come under threat.” AUD subsequently tested the 0.7000 level, rebounded to 0.7037 before dropping back down to close at 0.6997 (-0.42%). There remains no significant increase in downward momentum, but today, AUD could continue to ratchet lower. That said, a break below 0.6975 is unlikely. To sustain the tentative downward momentum, AUD must hold below 0.7030, with minor resistance at 0.7015."

"1-3 WEEKS VIEW: We turned negative on AUD late last week (see annotations in the chart below). After AUD fell to a low of 0.7005 two days ago, we highlighted the following yesterday (10 Jun, spot at 0.7025): “There has been no further increase in downward momentum, and AUD must break and hold below 0.7000 before further declines can be expected. The likelihood of AUD breaking clearly below 0.7000 will remain intact as long as AUD holds below 0.7085 (‘strong resistance’ level). Looking ahead, the next level to monitor below 0.7000 is 0.6975.” AUD subsequently declined to a low of 0.6995. While we would have preferred a more decisive break below 0.7000, the price action suggests that AUD could grind lower toward 0.6975. On the upside, the ‘strong resistance’ is now at 0.7060."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)