AUD/USD: Scope for AUD to retest 0.6375 – UOB Group
Sharp drop appears excessive, but there is scope for Australian Dollar (AUD) to retest 0.6375 before stabilisation can be expected. The risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Risk for AUD remains on the downside
24-HOUR VIEW: “We expected AUD to consolidate between 0.6435 and 0.6475 last Friday. However, AUD plummeted and closed at 0.6390 (-0.96%), its lowest daily closing since Apr this year. Although the sharp drop appears to be excessive, there is scope for AUD to retest last Friday’s low near 0.6375 before a stabilisation can be expected. The major support at 0.6350 is unlikely to come under threat. On the upside, should AUD break above 0.6430 (minor resistance is at 0.6415), it would mean that the weakness has stabilised.”
1-3 WEEKS VIEW: “Last Thursday (05 Dec, spot at 0.6430), we indicated that ‘the risk for AUD has shifted to the downside.’ However, we pointed out that, ‘the 0.6380 level is expected to provide significant support.’ On Friday, AUD broke below 0.6380, reaching a low of 0.6373. Despite the breach of the support level, downward momentum has not increased much. That said, the risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350. To keep the momentum going, AUD must not break above the ‘strong resistance’ of 0.6450 (level previously at 0.6490).”
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