The Australian Dollar (AUD) is likely to trade in a range, probably between 0.6515 and 0.6565. If AUD breaches 0.6565, it would suggest that the weakness from two weeks ago has stabilised, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.
AUD to break below 0.6515
24-HOUR VIEW: “After AUD plunged sharply in early Asian trade yesterday, we indicated that ‘the sharp decline appears to be a tad overdone.’ However, we held the view that ‘as long as 0.6540 is not breached, AUD could break below the major support at 0.6480.’ AUD subsequently dropped to but did not break 0.6480 (low has been 0.6480) and then rebounded to a high of 0.6555. The buildup in downward pressure fizzled out quickly. Today, AUD is likely to trade in a range, probably between 0.6515 and 0.6565.”
1-3 WEEKS VIEW: “We have held a negative AUD view for two weeks now. After AUD fell sharply early yesterday (31 Jul, spot at 0.6510), we pointed out that ‘the decline in AUD still seems to be overextended, and it is uncertain if 0.6425 will come into view.’ AUD subsequently dropped to the short-term support at 0.6480 and then rebounded strongly. From here, if AUD breaches the ‘strong resistance’ at 0.6565 (no change in level from yesterday), it would suggest that the weakness in AUD has stabilised.”