Analysts at MUFG Bank, recommend the idea of a long AUD/USD trade reflecting their expectation of a weaker US dollar in the near-term. They see a potential entry-level at 0.7435 with a target at 0.7675 and stop-loss at 0.7225.
“The USD has broken below key support levels over the past week triggering an accelerated sell-off. Historically, the USD has tended to underperform as well in December. The weaker than expected US employment report for November will increase pressure on both the Fed and Congress to loosen policy further heading into year end.”
“The improving outlook for global growth which has been led by the cyclical recovery China has helped to lift commodity prices and is set to continue. However, we do not believe that the improvement in Australia’s terms of trade is fully reflected in the value of the AUD yet. It leaves scope for further AUD upside ahead.”
“The next key resistance level for AUD/USD comes in at the 0.7500-level. A decisive break above would establish a new higher trading range between 0.7500 and 0.8000.”