AUD/USD: Downward momentum has increase slightly – UOB Group

Downward momentum has increase slightly; Australian Dollar (AUD) is likely to edge lower but is unlikely to reach 0.5870 vs US Dollar (USD). In the longer run, further declines are not ruled out; given the deeply oversold conditions, it is unclear if AUD can reach the next support at 0.5870, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Further declines are not ruled out for AUD/USD

24-HOUR VIEW: "After AUD plunged last Friday and on Monday, we indicated yesterday, Tuesday, that 'the sharp drop appears to be overdone.' We added, 'this, combined with early signs of slowing momentum, indicates that instead of continuing to drop, AUD is more likely to trade in a range of 0.5945/0.6110 today.' Our view of range trading was not wrong, even though AUD traded in a narrower range than expected (0.5947/0.6085), closing near the low at 0.5956, down by 0.55%. Downward momentum has increased slightly, and this is likely to lead to AUD edging lower. As momentum is not strong for now, any decline is unlikely to reach the major support at 0.5870 (there is another support at 0.5900). To keep sustain the momentum, AUD must not break above 0.6025 (minor resistance is at 0.5980)."

1-3 WEEKS VIEW: "AUD fell precipitously last Friday and fell further on Monday. Yesterday, Tuesday (08 Apr, spot at 0.6005), we indicated that 'although further declines are not ruled out, given the deeply oversold conditions, it is unclear if AUD can reach the next support at 0.5870.' We continue to hold the same view. Overall, only a breach of 0.6155 (‘strong resistance’ level was at 0.6185 yesterday) would suggest that the current downward pressure has eased."