A breakout of 0.68 should allow for extra gains in AUD/USD – UOB

In opinion of FX Strategists at UOB Group, AUD/USD should extend the up move on a daily close above 0.6805 in the near term.

Key Quotes

24-hour view: “We highlighted last Friday that AUD “could edge above the overnight high of 0.6774 but the major 0.6805 level is unlikely to come under threat”. We underestimated AUD strength as it moved above 0.6805 and touched 0.6810. While AUD could edge above 0.6810 from here, the rally appears to be tiring and the next resistance at 0.6830 is not expected to come into the picture. Support is at 0.6775 followed by 0.6760”.

Next 1-3 weeks: “We have held the same view since last Monday (07 Oct, spot at 0.6760) wherein AUD is “expected to trade sideways within a 0.6705/0.6805 range”. AUD came close to the bottom of the expected range last Thursday (10 Oct) but rebounded quickly from 0.6710 and edged above the top of the expected range on Friday (high of 0.6811). While the underlying tone has improved, only a NY closing above 0.6805 would suggest AUD is ready for a sustained recovery. Until then, we continue to view the current price action as part of a 0.6705/0.6805 range. At this stage, the probability for a clear break above 0.6805 is slightly more than even but it would continue to improve as long as AUD does not move below 0.6740 within these few days. Looking ahead, if AUD were to register a NY closing above 0.6805, further strength to 0.6860 would not be surprising”.