AUD/USD now sees extra consolidation – UOB

FX Strategists at UOB Group believe the Aussie Dollar has now moved into a consolidative theme.

Key Quotes

24-hour view: “We expected a higher AUD yesterday but noted that “last week’s top near 0.7795 is a rather strong level and is expected to offer solid resistance (0.7775 is already quite a strong level)”. AUD only managed to touch a high of 0.7758 before plummeting to close just above the overnight low of 0.7676 (close at 0.7678). The weak daily closing suggests further downward pressure and a dip below the month-to-date low of 0.7672 seems likely. That said, there is another strong support at 0.7650 and this level is unlikely to yield so easily (next support is further down at 0.7620). On the upside, only a move back above 0.7720 would indicate that the current weakness has stabilized. The 0.7758 high is not expected to come into the picture”.

Next 1-3 weeks: “While the neutral phase that started last Thursday (22 Mar, 0.7770) is still intact, the price action in AUD since then has been rather choppy. For now, we continue to hold a neutral view for this pair but downward pressure has picked up after the weak daily close in NY yesterday. A dip below the expected 0.7650/0.7820 consolidation range is not ruled out but at this stage, the prospect for a sustained decline towards the major 0.7600 support is rather low. In other words, we still expect AUD to consolidate even though the bias is tilted to the downside”.