Oversold conditions and slowing momentum suggest Australian Dollar (AUD) is likely to trade in a range of 0.6545/0.6585. In the longer run, the potential for further sustained decline may be limited; the next level to monitor is 0.6520, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD can test the 0.6585 resistance

24-HOUR VIEW: “After AUD fell sharply on Monday, we highlighted yesterday (Tuesday) that ‘While oversold, the decline could extend to 0.6560 before stabilisation can be expected.’ Our view of AUD declining was not wrong, even though it fell more than expected to 0.6545. Conditions remain oversold, this, combined with tentative signs of slowing momentum, suggests that instead of continuing to weaken, AUD is more likely to trade in a 0.6545/0.6585 range.”