AUD/USD downside pressure alleviated above 0.7830 – UOB

FX Strategists at UOB Group stay neutral on the Aussie Dollar, adding that the selling bias should mitigate on a breakout of the 09.7830 area.

Key Quotes

24-hour view: “We highlighted yesterday that “the major 0.7760 support is likely to be tested”. In line with expectation, AUD touched an exact low of 0.7760 during NY hours before closing just above the low at 0.7762. The weak daily closing suggests further downside risk even though the next support at 0.7730 is a major level and is unlikely to yield so easily (there is another support at 0.7700). Resistance is at 0.7790 followed by 0.7820”.

Next 1-3 weeks: “We have been drumming the same view that the weakened undertone in AUD “could lead to a test of 0.7730” since last Thursday (see update on 22 Feb, spot at 0.7805). Downward momentum has improved further with the sharp drop yesterday and this level appears to be within reach. From here, a NY close below 0.7730 would indicate that AUD has moved into a bearish phase but in view of the recent rapid and swift decline, we would have a modest ‘target’ of 0.7650. Overall, AUD is expected to continue to stay under pressure unless it can move and stay above 0.7820”.