Australian Dollar: Weakness may extend toward 0.6970 against US Dollar - UOB

UOB analysts Quek Ser Leang and Lee Sue Ann note that the Australian Dollar (AUD) is showing signs of weakness, potentially extending its decline toward the 0.6970 mark against the US Dollar (USD). While positive divergence hints at a slowdown in momentum, a clear base has not yet been established. They currently hold a negative short-term view, anticipating AUD to test the 0.6970 level.

However, intraday movements are expected to remain within the 0.6995–0.7035 range, barring a break of the resistance level at 0.7075. Over the next 24 hours, AUD experienced its lowest point since early August at 0.7006, although the weakness has not yet stabilized. Positive divergence suggests that further downward movement is less likely.

Looking ahead to the next 1-3 weeks, the analysts downgraded their stance on AUD two weeks ago. They now believe the likelihood of AUD reaching 0.7050 has decreased significantly. Despite a substantial decline over the past two weeks, there is still potential for AUD to dip lower and test the 0.6970 level before finding stability. Should AUD breach the 0.7075 mark, it could indicate that the weakness is stabilizing.