AUD/USD bearish below 0.7700 – UOB

The outlook on AUD/USD should shift to bearish from the current neutral on a daily close below the 0.7700 handle, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The rapid decline in AUD yesterday was unexpected. The down-move appears incomplete and further weakness seems likely from here. However, the 0.7730/35 low seen earlier this month is a major level and is expected to offer solid support (0.7755 is already quite a strong level). Resistance is at 0.7800 followed by the stronger level near 0.7825”.

Next 1-3 weeks: “We have held the same view that AUD is “expected to drift lower to test the 0.7735 low seen earlier this month” since Monday (23 Oct). The weaker than expected Australian inflation data was just released and this has triggered a rapid drop even though 0.7735 is still intact at the time of writing. While the immediate pressure is still clearly on the downside, there is another strong support at 0.7700 and only a NY closing below this level would indicate that AUD has moved into a bearish phase (with an immediate target of 0.7630). The odds for such a move are not high at this stage but would continue to improve unless AUD can reclaim 0.7825 within these few days”.