FX Strategists at UOB Group remain optimistic on spot and they now see it attempting a test of the 0.7110 region in the near term.
24-hour view: “AUD not only rocketed past the strong 0.7050 resistance, it also cracked 0.7070 and registered a 3-month high of 0.7075. While further AUD gains would not be surprising in the coming days, the short-term rally is running too fast, too soon. That said, it is too early to expect a sustained pull-back. AUD is more likely to consolidate its gains and trade sideways at these higher levels. Expected range for today, 0.7035/0.7085”.
Next 1-3 weeks: “After ‘hesitating’ below the major 0.7050/70 resistance zone for a couple of days, AUD suddenly blew past these major resistance levels and closed at a 3-month high of 0.7075 (thanks to dovish Fed-speak). As highlighted since Tuesday (16 Jul, spot at 0.7040), if AUD were to move and stay above 0.7070, it could extend its gains to 0.7110. All in, the mid to long-term outlook for AUD has turned brighter and if it can clear the major 0.7110 hurdle, it would suggest last month’s 0.6832 low could be a significant bottom (from the perspective of multi-weeks). Meanwhile, the strong upward pressure in AUD could carry it higher to 0.7110 (next resistance is at 0.7150). On the downside, only a break of the 0.7000 ‘key support’ (level was a strong support at 0.6980 yesterday) would indicate that the current ‘positive phase’ in AUD has ended”.