Australian Dollar (AUD) is likely to trade in a 0.6250/0.6300 range vs US Dollar (USD). In the longer run, increase in momentum indicates AUD could continue to decline, but it is too early to determine if it can reach 0.6185, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Unlikely to reach 0.6185
24-HOUR VIEW: “On Monday, AUD fell to a low of 0.6219. Yesterday, Tuesday, we highlighted that AUD ‘could retest the 0.6220 level, but given the oversold conditions, any further decline is not expected to reach the major support at 0.6185.’ However, AUD dipped less than expected to 0.6232 before rebounding sharply to close at 0.6279. The rapid rebound appears to be running ahead of itself, and AUD is unlikely to rise much further. Today, AUD is more likely to trade in a 0.6250/0.6300 range.”
1-3 WEEKS VIEW: “Yesterday (01 Apr, spot at 0.6245), we highlighted, after the sharp drop on Monday, the increase in momentum indicates that AUD ‘could continue to decline.’ However, we pointed out, ‘it is too early to determine if it can reach 0.6185.’ We added, ‘to sustain the buildup in momentum, AUD must remain below 0.6300.’ We did not quite expect the subsequent strong rebound. From here, a clear break above 0.6300 would indicate that AUD is likely to trade in a range instead of declining.”
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