In opinion of FX Strategists at UOB Group, AUD/USD could now be headed towards the 0.7730 level in the next weeks.
Key Quotes
24-hour view: “We highlighted last Friday that ‘despite the relatively sharp decline, downward momentum has not improved by much’. We added, ‘the risk is still on the downside but the major support at 0.7560 is likely out of reach’. While AUD subsequently dropped to 0.7583, the sharp rebound from the low came as a surprise (high of 0.7679 during NY hours). The rapid rise appears to be running ahead of itself and while AUD could edge higher from here, a sustained advance above 0.7700 is unlikely (next resistance is at 0.7730). On the downside, a break of 0.7630 (minor support is at 0.7650) would indicate the current upward pressure has eased.”
Next 1-3 weeks: “We have held a negative view in AUD since late January. Last Friday, we highlighted that ‘shorterterm downward momentum has improved slightly and while the focus is still at 0.7560, it may take a few more days before AUD can break this level’. However, we did not anticipate the sudden sharp rebound that cracked the ‘strong resistance’ level at 0.7655 (high of 0.7679). The break of the ‘strong resistance’ level indicates that the downside risk has dissipated. From here, AUD is expected to trade with an upward bias towards 0.7730. At this stage, the prospect for a sustained advance above this level is low. Support is at 0.7630 but only a break of 0.7580 would indicate the current mild upward pressure has eased.”
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