Rather than sustaining its downward momentum, Australian Dollar (AUD) is more likely to trade in a lower range of 0.6400/0.6470. In the longer run, AUD appears to have entered a consolidation phase and is likely to trade between 0.6370 and 0.6515, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

AUD appears to have entered a consolidation phase

24-HOUR VIEW: "While we expected AUD to 'advance further' yesterday, we pointed out that 'the major resistance at 0.6550 is likely out of reach for now.' We indicated that 'to sustain the momentum, AUD must not break below 0.6460, with minor support at 0.6480.' We were incorrect as after rising to 0.6515, AUD reversed sharply and plummeted to 0.6422. The decline appears overextended, and rather than sustaining its downward momentum, AUD is more likely to trade in a lower range of 0.6400/0.6470. In other words, AUD is unlikely to break clearly below 0.6400."

1-3 WEEKS VIEW: "Two days ago (06 May, spot at 0.6455), we highlighted that 'while further AUD strength is not ruled out, it must break and remain above 0.6510 before further sustained rise is likely.' Yesterday (07 May), when AUD was at 0.6500, we indicated that 'while we would have preferred a decisive break above 0.6510, the price action suggests that AUD could strengthen further to 0.6550.' Our view was invalidated quickly as AUD reversed sharply and plummeted below our ‘strong support’ level at 0.6425. AUD appears to have entered a consolidation phase, and for the time being, it is likely to trade between 0.6370 and 0.6515."