Risk for Australian Dollar (AUD) is on the downside vs US Dollar (USD), but any decline may not break the major support at 0.6280. In the longer run, AUD could edge lower, but it must break clearly below 0.6280 before a move to 0.6255 can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
AUD has a chance to edge lower
24-HOUR VIEW: “We did not expect AUD to drop to a low of 0.6296 yesterday (we were expecting range trading). Although the increase in downward momentum indicates downside risk today, any decline may break the major support at 0.6280. To sustain the momentum, AUD must not break above 0.6350 (minor resistance is at 0.6330).”
1-3 WEEKS VIEW: “Two days ago (25 Feb, spot at 0.6345), we revised our AUD view from positive to negative, indicating that the recent ‘upward momentum has largely faded,’ and AUD ‘is likely to consolidate to between 0.6280 and 0.6410.’ Yesterday, AUD fell to 0.6296, closing lower by 0.60% at 0.6305. There has been a tentative buildup in downward momentum, and AUD is likely to edge lower. However, it must break and hold below 0.6280 before a move to 0.6255 can be expected. The likelihood of AUD breaking clearly below 0.6280 will remain intact provided that the ‘strong resistance’ level at 0.6375 is not breached.”
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