AUD/USD: strong support aligns at 0.6790 – UOB

If the selling impetus picks up extra pace, AUD/USD is expected to meet solid contention in the 0.6790 region, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for a stronger recovery in AUD was incorrect as it slumped and edged below the strong 0.6850 support (overnight low of 0.6842). While downward momentum is patchy at best, AUD could continue to edge lower even though the major support at 0.6820 is unlikely to come under threat. On the upside, only a move above 0.6870 would suggest the current mild downward pressure has eased.”

Next 1-3 weeks: “While AUD breached 0.6849 yesterday (21 Jan), the price action lacks ‘spark’ and downward momentum has not improved by much. That said, the odds for AUD to move below 0.6820 have increased even though there is another solid support at 0.6790. Taking a step back, we have viewed the price action in AUD since early January as ‘part of a corrective pullback and not a major reversal’. The pullback appears to be over-extended and for now, a clear break of 0.6790 would come as a surprise. All in, AUD is expected to stay on the back foot unless it can reclaim 0.6900 (‘strong resistance’ level was at 0.6935 previously).”