AUD/USD shifted to bearish – UOB

The Aussie Dollar could extend the decline to the 0.7700 area vs. the greenback, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden acceleration lower was not expected as AUD crashed to an overnight low of 0.7817. While the sharp and rapid drop is severely over-extended, there is scope for a dip towards 0.7775 before stabilization can be expected (next support is at 0.7745). On the upside, 0.7870 is expected to be strong enough to cap any intraday rebound (minor resistance is at 0.7845)”.

Next 1-3 weeks: “The ‘bearish condition’ of a NY closing below 0.7860 highlighted since Monday (05 Feb, spot at 0.7910) was more than met as AUD crashed yesterday and quickly came close to the immediate target of 0.7805 (overnight low has been 0.7817, closing at 0.7821). The sharp and rapid decline appears to be over-extended but there is scope for further weakness towards 0.7745, with lower odds for extension to 0.7700. Only a move back above 0.7920 would indicate that our bearish view is wrong”.