AUD/USD could break below 0.7140 – UOB

Further downside could force AUD/USD to breach the 0.7140 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that the ‘the pullback in AUD has room to extend but any weakness is expected to encounter solid support at 0.7170’. Our view was not wrong as AUD dropped to a low of 0.7172. While oversold, the weakness in AUD has room to extend further even though a break of the major support at 0.7140 appears unlikely. Resistance is at 0.7200 followed by 0.7215.”

Next 1-3 weeks: “Last Monday (17 Jan, spot at 0.7210), we highlighted that the outlook for AUD is mixed and it is likely to trade within a range of 0.7140/0.7285. After a week, downward momentum is showing tentative signs of building as AUD dropped to 0.7172 last Friday. From here, the risk of AUD breaking 0.7140 has increased. On the upside, a breach 0.7240 would indicate that the downside risk has dissipated. Looking ahead, the next support below 0.7140 is at 0.7105.”