Price action in AUD/USD allows for further sideline trading – UOB

AUD/USD is likely to extend the consolidative mode in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our view from yesterday was “AUD could drift lower to 0.6730 but a sustained decline is unlikely”. While AUD did edge lower, it did not touch 0.6730 (low of 0.6733 in late-NY hours). The underlying tone still appears to be soft and a dip below 0.6730 would not be surprising. That said, a break of the next support at 0.6710 is unlikely (this support is followed by the Monday’s low of 0.6690). On the upside, AUD has to move above 0.6765 in order to indicate the current mild downward pressure has eased”.

Next 1-3 weeks: “As highlighted, the strong rebound from Monday’s (26 Aug) 0.6690 low suggests AUD has likely “moved back into a consolidation phase” and it could trade in an ‘undecided’ manner and within a relatively broad 0.6690/0.6845 range. Looking back, AUD has traded mostly sideways this month aside from the fleeting drop to 0.6678 on 07 Aug (RBNZ shock 50 bps rate cut) and the equally brief drop on Monday (trade war escalation). In other words, barring any further ‘shocking’ headlines, AUD could trade sideways for a while more”.