AUD/USD: Chance for AUD to test 0.6500 - UOB Group

Sharp drop in Australian Dollar (AUD) looks overstretched against US Dollar (USD), but there is a chance for AUD to test 0.6500; the major support at 0.6480 is unlikely to come into view. In the longer run, there has been a tentative buildup in momentum; AUD is likely to edge lower to 0.6480, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

AUD is likely to edge lower to 0.6480

24-HOUR VIEW: "Yesterday, we noted that AUD 'is under mild downward pressure.' We indicated the following: 'The slight increase in momentum indicates AUD may edge lower today, but any decline is unlikely to reach 0.6515. Resistance is at 0.6560; a breach of 0.6575 would suggest that the current mild downward pressure has faded.' In the early NY session, AUD rose briefly to 0.6575 and then plummeted below 0.6515, reaching a low of 0.6508. The sharp drop looks overstretched, but there is a chance for AUD to test 0.6500. The major support at 0.6480 is unlikely to come into view. Resistance levels are at 0.6540 and 0.6555."

1-3 WEEKS VIEW: "Yesterday (15 Jul, spot at 0.6545), we reiterated our neutral view, indicating that AUD 'is likely still trading in a 0.6515/0.6615 range.' AUD broke below 0.6515 in the NY trade, reaching a low of 0.6508. There has been a tentative buildup in momentum. From here, we expect AUD to edge lower, but currently, it is unclear if it has enough momentum to break clearly below 0.6480. To maintain the momentum buildup, AUD must hold below the 'strong resistance' level, currently at 0.6575."