UOB economists Quek Ser Leang and Lee Sue Ann report that AUD/USD surged to 0.7220 before reversing sharply and opening lower, with the latest drop seen as excessive but not yet complete. They expect further weakness to stay within a 0.7100–0.7180 intraday band and judges that broader price action now points to a range-trading phase between 0.7060 and 0.7210.

Australian Dollar seen in range phase

"We expected AUD to “trade in a range of 0.7130/0.7180” last Friday. We did not expect volatile price action as AUD surged to 0.7220 and then dropped sharply to close little changed at 0.7167 (+0.08%). AUD dropped sharply on the open today."

"While the sharp drop appears to be excessive, AUD could weaken further. That said, any decline is likely part of a lower range of 0.7100/0.7180. In other words, AUD is unlikely to break clearly below 0.7100."

"Although our ‘strong support’ level at 0.7085 has not been breached yet, upward momentum has largely faded. The current price movements are likely part of a range-trading phase between 0.7060 and 0.7210."

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