Australian Dollar (AUD) could test the major support at 0.6500; a sustained drop below this level appears unlikely. In the longer run, the price action continues to suggest AUD weakness, likely toward 0.6500, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Price action continues to suggest AUD weakness

24-HOUR VIEW: "We expected AUD to 'trade in a range of 0.6565/0.6605' yesterday. Our expectation turned out to be incorrect, as after edging to a high of 0.6604, AUD plunged to a low of 0.6527. While deeply oversold, AUD could test the major support at 0.6500 (there is a minor support at 0.6520). However, a sustained drop below this level appears unlikely for now. Resistance levels are at 0.6550 and 0.6565."

1-3 WEEKS VIEW: "We turned slightly negative on AUD on Monday (22 Sep, spot at 0.6595), indicating that 'while downward momentum has not increased significantly, AUD could edge lower and test 0.6550.' After AUD dropped to a low of 0.6575, we highlighted yesterday (25 Sep, spot at 0.6585) that “while there has been no significant increase in downward momentum, the price action suggests that the likelihood of AUD testing 0.6550 is increasing.” We did not expect the sharp drop that sent AUD to a low of 0.6527. The price action continues to suggest AUD weakness, likely toward 0.6500. We will maintain our view as long as 0.6600 (‘strong resistance’ level was at 0.6635 yesterday) is not breached."