United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight an abrupt 1.22% plunge in AUD/USD to 0.6908, leaving the pair deeply oversold but still biased lower. Intraday, they see potential for a brief break below 0.6900 while expecting it not to hold. On a 1–3 week view, the impulsive decline points to further downside, with 0.6835 as a key support if 0.7000 caps.

Impulsive downside keeps Aussie under pressure

"24-HOUR VIEW: After our expectation for AUD to trade with a downside bias did not materialise two days ago, we highlighted yesterday that “the bias remains on the downside, but AUD still does not appear to have enough momentum to reach 0.6980.” However, in an abrupt move, AUD broke below 0.6980 and plunged to a low of 0.6908. 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."

"1-3 WEEKS VIEW: We revised our AUD view to negative last Thursday (18 Jun, spot at 0.7025). We indicated that “downward momentum is increasing, and AUD is likely to drop toward the month-to-date low, near 0.6980.” AUD traded sideways for a few days, but in a sudden move yesterday, it staged a sharp drop that sent it plunging to a low of 0.6908. AUD closed lower by a whopping 1.22% at 0.6916. While the impulsive decline suggests further AUD downside, it remains to be seen if the major weekly support at 0.6835 (see 1-3 months view below) is within reach during this phase of weakness. On the upside, a break above 0.7000 would mean that the weakness is stabilising."

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