In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, further upside in AUD/USD is likely to face a tough barrier around 0.6820 zone.
24-hour view: We expected AUD to “continue to rise” yesterday. However, we noted that “overbought conditions suggest 0.6800 is unlikely to come into view”. In NY trade, AUD popped briefly to 0.6807 and then pulled back to end the day slightly higher at 0.6768 (+0.26%). Conditions remain overbought and this combined with tentative signs of slowing momentum, suggests AUD is unlikely to advance much further. Today, AUD is more likely to trade sideways between 0.6735 and 0.6795.
Next 1-3 weeks: Yesterday (13 Jun, spot at 0.6755), we held the view that AUD “is likely to strengthen further to 0.6800”. In NY trade, AUD rose to 0.6807 and then pulled back to close at 0.6768 (+0.26%). While the AUD strength that started at the end of last week (see annotations in the chart below) is still intact, any further advance is expected to face solid resistance at 0.6820. All in all, only a breach of 0.6705 (‘strong support’ level was at 0.6695 yesterday) would indicate that AUD is not advancing further.
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