AUD/USD still targets the 0.6770 area – UOB

AUD/USD remains on track to reach the 0.6770 region in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected AUD to consolidate within a 0.6580/0.6670 range last Friday. AUD subsequently popped to a high of 0.6683 before easing off to close at 0.6674 (+0.55%). The strong price action upon opening this morning suggests AUD could strengthen further from here. That said, AUD may not be able to maintain a toe-hold above 0.6735 (next resistance is at 0.6770). Support is at 0.6670 followed by 0.6650.”

Next 1-3 weeks: “Last Friday (29 May, spot at 0.6630) we highlighted that AUD ‘could ill-afford to consolidate at these overbought levels or risk of a top would increase quickly’. AUD subsequently eked out a fresh high of 0.6683 before closing at 0.6674 (+0.55%). The strong price action upon opening this morning has resulted in an improvement in momentum but in view of the severely overbought conditions, AUD has to post a daily closing above 0.6705 before further sustained advance towards 0.6770 can be expected. On the downside, a breach of 0.6605 (‘strong support’ level was at 0.6550 last Friday) would indicate that the positive phase that started 2 weeks ago has run its course.”