In a recent analysis, UOB’s analysts Quek Ser Leang and Lee Sue Ann provided insights into the Australian dollar’s performance against the U.S. dollar following disappointing economic data. The Australian GDP figures indicated a contraction that has pressured the AUD/USD pair, which is currently hovering just above the critical support level of 0.7120.
Intraday momentum suggests that the pair may retest this support level soon. However, according to the analysts, oversold market conditions could prevent a sustained decline below this threshold. Should the pair break through 0.7120, the next target could be 0.7095, although the broader technical outlook points to potential declines toward the 0.6850 to 0.6870 range.
In their 24-hour view, the analysts initially anticipated a gradual decline to 0.7150, expressing skepticism that the level of 0.7135 would come under pressure. However, the selloff occurred more sharply than expected, with the audacity of the AUD dropping to a low of 0.7127. They noted that while strong downward momentum may prompt the currency to test the support at 0.7120, the prevailing oversold conditions indicate that a significant drop below this level could be unlikely. If the pair does rebound, a breach above 0.7155, with minor resistance detected at 0.7145, would signal a stabilization of the AUD’s decline.
Looking ahead, the analysts believe that the AUD is likely to trade within a range, a position they suggested earlier last week. As of their latest assessment while the AUD was spotted at 0.7175, the outlook has narrowed further to a range of 0.7120 to 0.7205. With the apparent increase in downward momentum, a sustained break below the support level of 0.7120 could lead to further declines, with the 0.7095 mark in sight. The outlook for the AUD maintaining its position above 0.7120 relies on a failure to breach the 0.7185 level.
