AUD/USD faces some consolidative mood near term – UOB

The rebound from oversold levels in AUD/USD could now open the door for some consolidation in the near term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for AUD to “trade sideways to slightly higher” was incorrect as it dropped briefly to 0.6670 before rebounding strongly. Downward pressure appears to have eased but it is too soon to expect a sustained recovery. From here, AUD is expected to trade sideways, likely between 0.6690 and 0.6735”.

Next 1-3 weeks: “We highlighted on 19 Sep (spot at 0.6820) that “a short-term top is in place” and AUD is expected to “trade sideways to lower for the next 1 to 2 weeks”. As AUD declined quickly, we raised the prospect for further weakness and our latest narrative was from last Thursday (26 Sep, spot at 0.6760) wherein AUD “remains weak and the next focus is at 0.6700”. While our view for the 2 weeks was correct, the manner by which AUD plunged below 0.6700 yesterday and the subsequent sharp rebound from 0.6672 was not exactly expected. Despite the robust bounce, AUD is not out of the woods just yet and only a break 0.6775 (‘strong resistance’ level previously at 0.6805) would indicate that a short-term bottom is in place. That said, severely oversold short-term conditions suggest AUD could consolidate and trade sideways for a period. Looking ahead, a NY closing below 0.6670 would suggest AUD is ready for the next support at 0.6620”.