The next level to watch is 0.6700 – UOB Group

The weakness of the Australian dollar (AUD) has not stabilized; any further decline is likely part of a lower trading range of 0.6735/0.6785. In the longer term, the AUD is expected to continue to weaken, although probably at a slower pace. The next level to watch is 0.6700, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

Weakness in the AUD has not stabilized

24-HOUR VIEW: “Our view of yesterday’s sideways trading was incorrect. Instead of trading sideways, the AUD fell sharply to 0.6744 before closing at 0.6759 (-0.51%). Although the weakness has not stabilized, severe oversold conditions suggest that any further decline is likely part of a lower trading range of 0.6735/0.6785. A sustained break below 0.6735 looks unlikely and major support at 0.6700 is also unlikely to occur.”

WEEKS 1-3: “When the AUD was trading at 0.6850 last Friday (Oct 04) I indicated that ‘there was a slight increase in downside momentum and the risk of the AUD falling below 0.6820 also increased.’ After the AUD fell below 0.6820, I indicated yesterday (Oct 07 at 0.6800) that “momentum has increased and the AUD is likely to decline further, possibly below 0.6750″. AUD then broke below 0.6750 in NY trade, touching a low of 0.6744. We still expect the AUD to weaken, although short-term oversold conditions could slow the pace of any further decline. The next level to watch is 0.6700. We will continue to see the AUD bearish as long as 0.6825 (the ‘strong resistance’ level was at 0.6855 yesterday) is not breached.”