The AUD/USD currency pair is facing scrutiny as it hovers near a critical support level, according to UOB analysts Quek Ser Leang and Lee Sue Ann. The pair experienced a sharp selloff following weaker Australian Gross Domestic Product (GDP) data, causing it to drop to a low of 0.7127. This level, at 0.7120, is now under close examination, with analysts predicting further tests of this support.
The analysts highlight the oversold conditions in the market, suggesting that a sustained break below 0.7120 is unlikely. Instead, they predict that the pair might find support at 0.7095, which could act as a buffer against further downward pressure. However, the broader technical picture points to more significant declines, with the pair potentially falling towards 0.6850/0.6870.
In the short term, the 24-hour view shows a gradual decline in AUD, with the pair holding above the 0.7135 level. While strong momentum suggests further tests of the 0.7120 support, the analysts note that oversold conditions may prevent a sustained break. The 0.7095 level is seen as a more likely target if the pair does break below 0.7120.
Looking ahead to the 1-3 week view, the analysts expect AUD to continue trading in a range, with the 0.7120/0.7205 band acting as a key containment zone. A breach of 0.7155, with minor resistance at 0.7145, would indicate a stabilization of the AUD decline. However, as long as 0.7185 is not breached, the probability of a clear break below 0.7120 remains intact.
This analysis provides a nuanced perspective on the AUD/USD pair, considering both short-term momentum and longer-term technical indicators. The oversold conditions and potential support levels offer a balanced view, while the broader technical picture suggests a more bearish outlook. As always, market dynamics can be complex, and further developments will shape the direction of this currency pair.
