Rather than continuing to weaken, Australian Dollar (AUD) is more likely to trade in a lower range of 0.6565/0.6605. In the longer run, the price action suggests that the likelihood of AUD testing 0.6550 is increasing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

The likelihood of AUD testing 0.6550 is increasing

24-HOUR VIEW: "Following AUD’s price movements two days ago, we highlighted yesterday that 'momentum indicators are mostly flat, and today, we expect AUD to trade in a range of 0.6585/0.6620.' We did not anticipate the increase in volatility, as AUD rose to 0.6628 and then dropped to a low of 0.6575. As the decline came after a brief upward move, downward momentum has not increased much. Rather than continuing to weaken today, AUD is more likely to trade in a lower range of 0.6565/0.6605."

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 traded in a range for a few days, we indicated yesterday (24 Sep, spot at 0.6600) that 'downward momentum is starting to fade, and unless we see a meaningful decline soon, a breach of 0.6635 (‘strong resistance’ level previously at 0.6650) would mean that AUD is likely to trade in a range rather than edging lower.' AUD subsequently rose to a high of 0.6628 before dropping sharply to 0.6575. While there has been no significant increase in downward momentum, the price action suggests that the likelihood of AUD testing 0.6550 is increasing. On the upside, the ‘strong resistance’ level remains at 0.6635 for now."