AUD/USD could attempt to form a base – UOB

FX Strategists at UOB Group remain neutral on the Aussie Dollar in the short term, adding that the pair could be trying to carve a base.

Key Quotes

24-hour view: “AUD touched a low of 0.7318 last Friday before staging a robust recovery. The rebound appears to be running too fast, too soon but a test of the major 0.7460 resistance would not be surprising (the next resistance is at 0.7485). On the downside, only a break of 0.7390 would indicate that the current upward pressure has eased”.

Next 1-3 weeks: “In our last update on 13 Jul (spot at 0.7405), we were of the view that the “soft patch in AUD could test the major 0.7300 support”. We added that any weakness is viewed as “part of a basing phase instead of the start of a sustained decline”. The 0.7300 level was however unthreatened as AUD rebounded strongly after touching a low of 0.7318 last Friday. We continue to view the price action as part of a basing phase even though it is premature to expect a sustained up-move. That said, the recent mild downward pressure has eased and the 0.7300 level is unlikely to come into the picture, at least not within the next 1 to 2 weeks. All in, AUD is expected to trade sideways but the immediate bias is for a probe of the top of the expected 0.7360/0.7485 consolidation range. Looking ahead, a clear break of 0.7485 would bolster our view that AUD is trying to form a base”.