The sharp drop seems excessive, but there is room for the Australian Dollar (AUD) to retest 0.6375 before stabilization can be expected. Risk to AUD remains to the downside, likely towards year-to-date low near 0.6350, FX analysts at UOB GroupQuek Ser Leang and Lee Sue Ann.
Risk to AUD remains to the downside
24 HOUR VISION: “We expected the AUD to consolidate between 0.6435 and 0.6475 last Friday. However, the AUD plummeted and closed at 0.6390 (-0.96%), its lowest daily close since April this year. Although the sharp drop appears to be excessive, there is room for AUD to retest last Friday’s low near 0.6375 before stabilization can be expected. Support at 0.6350 is unlikely to be threatened. To the upside, if AUD breaks above 0.6430 (minor resistance is at 0.6415), it would mean that weakness has stabilized.”
1-3 WEEK OUTLOOK: “Last Thursday (December 5, pair at 0.6430), we indicated that ‘the risk to the AUD has changed to the downside.’ However, we note that, ‘the 0.6380 level is expected to provide significant support.’ On Friday, AUD broke below 0.6380, reaching a low of 0.6373 Despite the break of the support level, the bearish momentum has not increased much. risk to AUD remains to the downsideprobably towards the year-to-date low, near 0.6350. To maintain the momentum, the AUD must not break above the ‘strong resistance’ of 0.6450 (previously level at 0.6490).”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
