Downside Near-term risks for the AUD/USD - UOB

Markets and Economist Strategists of the UOB Group predict more decline in the AUD/USD in the coming weeks.

Important Quotations: "While we expected the Australian dollar to drop yesterday, we also thought that any decline would encounter firm resistance above 0.6695. The expected authorization was absent as the AUD fell to a low of 0.6580. Although the excessive collapse seems unwarranted, the Australian dollar could still fall below 0.6550 before stabilizing. It is unlikely that the next support level at 0.6500 will be reached today. Any upward movement will likely remain below 0.6665 (the level of 0.6625 serves as a small barrier).

For the next three weeks: "Since two days ago, we had anticipated AUD to stabilize between 0.6695 and 0.6820. Yesterday (07 Mar, spot at 0.6760), we stated that "Going forward, if AUD were to break and hold below 0.6695, it would signal the weakening in AUD has returned". Despite this, we did not anticipate the disproportionate decrease as the AUD broke through many solid support levels and fell to a low of 0.6580. While the price moves suggest AUD is likely to decline further, any weakness is likely to be at a slower pace, and the major support around 0.6500 may not come into view so soon. As long as the Australian dollar stays below 0.6700 (a "strong resistance" level), the downside risk is still present.