Australian Dollar (AUD) is likely to consolidate in a range of 0.6475/0.6535 against US Dollar (USD). In the longer run, downward momentum has built further, but AUD may consolidate first before attempting to break below 0.6455, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum has built further

24-HOUR VIEW: "In the early Asian trade yesterday, when AUD was at 0.6515, we held the view that 'there is a chance for it test 0.6480.' However, we pointed out that 'based on the current momentum, AUD is unlikely to be able to break below 0.8480.' Though our directional call was correct, we did not expect AUD to drop sharply to 0.6455 and then rebounded. The rebound in oversold conditions indicates AUD is unlikely to weaken further. Today, AUD is more likely to consolidate in a range of 0.6475/0.6535."

1-3 WEEKS VIEW: "Two days ago (16 Jul, spot at 0.6520), we indicated that 'there has been a tentative buildup in momentum, and AUD is likely to edge lower to 0.6480.' We also indicated that 'to maintain the momentum buildup, AUD must hold below the ‘strong resistance’ level, currently at 0.6575.' Yesterday, in a surprise move, AUD not only broke below 0.6480, but also tested the next major support at 0.6455. Downward momentum has built further, but given the oversold short-term conditions, AUD may consolidate for a couple of days. Overall, as long as 0.6560 (‘strong resistance’ level previously at 0.6575) is not breached, there is potential for AUD to break below 0.6455. Looking ahead, the next level to monitor below 0.6455 is 0.6420."