AUD/USD: Upside bias alleviated below 0.7040 – UOB

According to UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia, AUD/USD could see its upside momentum mitigated on a breach of 0.7040.

Key Quotes

24-hour view: “We highlighted last Friday that ‘upward pressure has eased and AUD is unlikely to advance much further’ and we expected AUD to ‘trade in a range between 0.7085 and 0.7145’. Our view for range-trading was not wrong even though AUD traded within a narrower range than expected (0.7083/0.7130). Momentum indicators are mostly flat and AUD could continue to trade in a range, likely between 0.7075 and 0.7125.”

Next 1-3 weeks: “Our most recent narrative was from last Thursday (26 Jan, spot at 0.7100) where we highlighted that ‘the improved upward momentum suggests AUD is likely to advance further’. However, AUD has not been able to make much headway on the upside as it traded in a relatively quiet manner the past couple of days. Upward momentum is beginning to ease but only a breach of 0.7040 (no change in ‘strong support’ level) would indicate that AUD is not advancing further.”