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FX Strategists at UOB Group remain neutral on the Aussie Dollar in the short term, adding that the pair could be trying to carve a base.

Key Quotes

24-hour view: “AUD touched a low of 0.7318 last Friday before staging a robust recovery. The rebound appears to be running too fast, too soon but a test of the major 0.7460 resistance would not be surprising (the next resistance is at 0.7485). On the downside, only a break of 0.7390 would indicate that the current upward pressure has eased”.

Next 1-3 weeks: “In our last update on 13 Jul (spot at 0.7405), we were of the view that the “soft patch in AUD could test the major 0.7300 support”. We added that any weakness is viewed as “part of a basing phase instead of the start of a sustained decline”. The 0.7300 level was however unthreatened as AUD rebounded strongly after touching a low of 0.7318 last Friday. We continue to view the price action as part of a basing phase even though it is premature to expect a sustained up-move. That said, the recent mild downward pressure has eased and the 0.7300 level is unlikely to come into the picture, at least not within the next 1 to 2 weeks. All in, AUD is expected to trade sideways but the immediate bias is for a probe of the top of the expected 0.7360/0.7485 consolidation range. Looking ahead, a clear break of 0.7485 would bolster our view that AUD is trying to form a base”.