AUD/USD seen weaker, now targets 0.7035 – UOB

Further weakness a potential test of 0.7035 is expected around AUD/USD, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “Instead of extending its decline (as expected yesterday), AUD consolidated and traded sideways in a relatively quiet manner before ending the day largely unchanged (NY close of 0.7113, +0.09%). The consolidation phase appears incomplete and further range trading seems likely from here. Expected range for today; 0.7090/0.7130”.

Next 1-3 weeks: “We have been bearish AUD since early this month (see update on 03 Sep, spot at 0.7185) but indicated that we are mindful of the longterm 0.7145/60 support zone. AUD held above this support zone for several days and we warned last Thursday (06 Sep, spot at 0.7195) that “AUD has to break the major support soon”. The support zone finally cracked last Friday as AUD plunged to a low of 0.7099. From here, the outlook is still clearly bearish and we anticipate further AUD weakness to 0.7035, with decent odds for further extension to 0.7000. That said, in view of the oversold conditions, AUD may not be able to maintain the current pace of decline. On the upside, the ‘stop-loss’ level is adjusted to 0.7195 from 0.7260. On a shorter-term note, 0.7160 is already a strong resistance”.