United Overseas Bank’s (UOB) Quek Ser Leang notes AUD/USD remains locked in a short-term range between 0.6880 and 0.6920 after a recent impulsive decline. Downward momentum is starting to ease, with a break above 0.6940 seen as signalling that the major 0.6835 support is out of reach. On a 1–3 month view, the bank still flags further downside risk.

Downside phase cools but trend stays negative

"24-HOUR VIEW: We expected AUD to “trade in a range between 0.6880 and 0.6920” last Friday. AUD then traded within a lower range of 0.6875/0.6917, closing 0.30% lower at 0.6890. The price action still appears to be part of a range-trading phase, and we continue to expect AUD to trade in a range between 0.6880 and 0.6920."

"1-3 WEEKS VIEW: We turned negative on AUD on 18 Jun, when it was at 0.7025. We indicated that it “is likely to drop to the month-to-date low, near 0.6980.” AUD subsequently plunged, and in our most recent narrative from last Wednesday (24 Jun, spot at 0.6900), we highlighted that “while the impulsive decline earlier this week suggests further AUD downside, it remains to be seen if the major weekly support at 0.6835 is within reach during this phase of weakness.” Since then, AUD has traded mostly in a range, and downward momentum is starting to ease. A break above 0.6940 (‘strong resistance’ was at 0.6950 last Friday) would indicate that 0.6835 is out of reach. Near-term, 0.6860 is already a firm support level."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)