AUD/USD faces key support at 0.6970 – UOB

Further downside in AUD/USD is probable and faces important contention in the 0.6970 area, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected AUD to weaken yesterday but held the view that ‘0.7030 is expected to offer solid support’. The support did not materialize as AUD dropped to a low of 0.7016 before rebounding. While downward momentum has eased somewhat, it is too early to expect a sustained recovery. From here, AUD could edge downwards but any weakness is viewed as a lower trading range of 0.7010/0.7085 (a sustained decline below 0.7010 is unlikely).”

Next 1-3 weeks: “We first turned negative AUD on Tuesday. Yesterday (24 Sep, spot at 0.7075), we noted that 0.7030 is a solid support and ‘a break of this level could potentially trigger further rapid decline’. AUD subsequently cracked 0.7030 but it rebounded after touching a low of 0.7016. Slowing shorter-term momentum could lead to a couple of days of consolidation first. As long as the ‘strong resistance’ at 0.7180 is intact (no change in level from yesterday), the current negative phase still appears to have room to run. The next support is at 0.6970.”