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AUD/USD’s outlook remains constructive although it faces a formidable hurdle in the 0.6700 neighbourhood, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘further sustained AUD strength is unlikely’ and expected it to ‘trade within a 0.6600/0.6680 range’. AUD rose to the top of the expected range at 0.6680 before staging a surprising sharp drop to 0.6568. The subsequent rapid bounce from the low suggests that 0.6568 could be a short-term bottom. However, it is too early to expect the recent AUD strength to resume. The dented upward momentum indicates that AUD could consolidate for today, likely staying within yesterday’s 0.6568/0.6680 range.”

Next 1-3 weeks: “We have held a positive view in AUD since early last week but after the swift pull-back from 0.6617, we highlighted yesterday (26 May, spot at 0.6545) that ‘the risk is still on the upside but the prospect for a move to 0.6645 has diminished’. However, AUD blast past 0.6645 yesterday before retreating after touching a high of 0.6676. At this stage, it is not clear whether AUD can rise beyond the formidable longer-term resistance at 0.6705. That said, the current positive outlook in AUD is deemed as intact as long as it does not move below 0.6550 (‘strong support’ level was at 0.6500 yesterday).”