AUD/USD: Likely to trade in a higher range of 0.6505/0.6545 – UOB Group
|The underlying tone in Australian Dollar (AUD) has firmed against US Dollar (USD), but this is likely to lead to a higher range of 0.6505/0.6545 instead of a sustained rise. In the longer run, downward momentum is beginning to slow; the likelihood of AUD dropping to 0.6455 is diminishing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum is beginning to slow
24-HOUR VIEW: "Following last Friday’s price movements in AUD, we indicated yesterday (Monday) that 'momentum indicators are still mostly flat, and AUD could continue to consolidate today, most likely in a range of 0.6490/0.6535.' AUD subsequently traded between 0.6500 and 0.6538, closing at 0.6525 (+0.25%). The underlying tone has firmed, but this is likely to lead to a higher range of 0.6505/0.6545 instead of a sustained rise."
1-3 WEEKS VIEW: "Last Wednesday (16 Jul, spot at 0.6520), we indicated that 'there has been a tentative buildup in momentum, and AUD is likely to edge lower to 0.6480.' After AUD dropped to a low of 0.6455, we highlighted the following last Friday (18 Jul, spot at 0.6500): 'Downward momentum has built further, but given the oversold short-term conditions, AUD may consolidate for a couple of days. Overall, as long as 0.6560 (‘strong resistance’ level) is not breached, there is potential for AUD to break below 0.6455.' Yesterday, Monday, AUD rose to a high of 0.6538. Downward momentum is beginning to slow, and the likelihood of AUD dropping to 0.6455 is diminishing. From here, unless AUD breaks and holds below 0.6490 in the next couple of days, a breach of the ‘strong resistance’ at 0.6560 will not be surprising."
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