United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann turned more negative on AUD/USD after a sharp fall to 0.7140. They reported a chance the pair could test 0.7100, with further downside to 0.7065 if 0.7100 breaks.
In their 24-hour view, they had previously expected a dip below 0.7200 but not the faster drop to 0.7140. They said any rebound should stay below 0.7170, with minor resistance at 0.7155.
Near Term Technical Outlook
In their 1–3 weeks view, they revised the outlook to negative on 15 May when spot was 0.7215. They now see rising downward momentum that could push AUD/USD through 0.7100, with 0.7065 as the next support.
They added that to keep the current momentum, AUD/USD needs to remain below 0.7205, described as strong resistance. They noted that the prior strong resistance level was 0.7260 last Friday, and that 0.7170 is now firm resistance.
We see the Australian dollar coming under accelerating downside pressure, very similar to the sharp sell-off we witnessed around this time in May of 2025. The US dollar is gaining strength as recent data shows core inflation remains sticky, pushing back expectations for Federal Reserve rate cuts. This contrasts sharply with the Reserve Bank of Australia, which is signaling a more neutral-to-dovish stance amid softening domestic economic indicators.
For the immediate term, the AUD/USD has broken below key support and there is a clear chance it will test the 0.6500 psychological level in the coming days. Derivative traders could look at buying near-term put options with a 0.6500 strike price to position for this potential drop. Any recovery is likely to be limited, with 0.6580 now acting as a firm resistance level.
One To Three Weeks View
Looking out over the next one-to-three weeks, the rapid increase in downward momentum suggests a break of 0.6500 is likely. This would open up the next major support level at 0.6440, a level last seen in late 2025. To maintain this negative bias, the Aussie must stay below the strong resistance level of 0.6620, making this a logical point for placing stop-loss orders on short positions.
This view is reinforced by the slump in commodity prices, which are crucial for the Australian economy. Iron ore prices, for instance, have fallen over 10% in the past month to around $105 per tonne due to persistent weakness in China’s property market. This fundamental headwind gives us greater conviction that the path of least resistance for the Aussie dollar is lower.
We remember underestimating the build-up in momentum back in mid-May of 2025, when a dip below 0.7200 quickly snowballed into a major sell-off toward 0.7100. That past event serves as a good reminder of how quickly sentiment can turn against the Aussie once key levels are breached. Therefore, establishing bearish positions or buying protection against further declines appears to be the most sensible strategy in the weeks ahead.
