United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD’s sharp fall to 0.6883 before a modest recovery to 0.6901, with deeply oversold conditions pointing to near-term range trading between 0.6880 and 0.6920. Over the next 1–3 weeks, they still see scope for further Australian Dollar weakness, while questioning whether the key 0.6835 support will be reached in this downswing.

Oversold bounce within broader decline

"24-HOUR VIEW: AUD plunged to a low of 0.6908 two days ago. Yesterday, when AUD was at 0.6920, we highlighted the following: “The outsized selloff appears to be overdone, but there is no sign of stabilisation yet. Today, as long as 0.6960 (minor resistance is at 0.6935) is not breached, AUD could drop below 0.6900. Given the deeply oversold conditions, AUD is unlikely to be able to maintain a foothold below this level.” While AUD subsequently dropped to a low of 0.6883, it recovered to close at 0.6901 (-0.21%). Conditions are deeply oversold, and this, combined with a tentative slowdown in momentum, suggests AUD is unlikely to weaken much further. Today, we expect AUD to trade in a range, most likely between 0.6880 and 0.6920."

"1-3 WEEKS VIEW: Our update from yesterday (24 Jun, spot at 0.6920) still stands. As highlighted, while the impulsive decline two days ago “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.” Overall, only a breach of 0.6960 (‘strong resistance’ was at 0.7000 yesterday) would indicate that the decline that started last Friday is stabilising."

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