Scope for Australian Dollar (AUD) to edge higher, but any advance is likely limited to a test of 0.6815. In the longer run, outsized advance suggests further AUD strength; given the overbought conditions, it remains to be seen if 0.6870 is within reach, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.
The 0.6870 resistance may be out of reach
24-HOUR VIEW: “AUD traded between 0.6762 and 0.6796 yesterday, higher than our expected sideways trading range of 0.6750/0.6790. The price action has resulted in a slight increase in upward momentum. Today, there is scope for AUD to edge higher, but any advance is likely limited to a test of 0.6815. The major resistance at 0.6870 is unlikely to come under threat. On the downside, a breach of 0.6760 (minor support is at 0.6775) would indicate that the current mild upward pressure has eased.”
1-3 WEEKS VIEW: “Our update from Monday (26 Aug, spot at 0.6790) is still valid. As indicated, while the outsized advance from last Friday suggests further AUD strength, given the overbought conditions, it remains to be seen if 0.6870 is within reach in the next 1 to 2 weeks. On the downside, if AUD breaks the ‘strong support’ at 0.6730 (level previously at 0.6710), it would suggest that it is not strengthening further.”
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