According to Quek Ser Leang at UOB Group’s Global Economics & Markets Research, AUD/USD still risks a potential decline within the next two months.
“In Dec last year, AUD/USD tried twice but both times failed to break the Nov 2020 low of 0.6990. In Jan this year, AUD/USD dipped below 0.6690 but rebounded sharply from 0.6968. Weekly MACD is ‘vacillating’ and there is no clear AUD/USD direction for now. That said, there are several strong resistance levels on the upside. The levels between 0.7310 and 0.7330 is a solid resistance zone (55-week exponential moving average and declining trend-line). Higher up, the top of the Ichimoku cloud is at 0.7500. The top of the Ichimoku cloud is followed closely by the Oct 2021 high of 0.7556. In other words, while AUD/USD could strengthen from here, the resistance levels mentioned are likely to impede any advance.”
“Conversely, on the downside, if AUD/USD closes below 0.6990 on a weekly basis, it could potentially trigger a swift decline as the next support level is near 0.6760, the 50% retracement of the rally from Mar 2020 low of 0.5510 to Feb 2021 high of 0.8807. Overall, while there is no clear direction at this stage, the risk within these couple of months appears to be greater on the downside.”
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