In opinion of FX Strategists at UOB Group, AUD/USD is seen re-visiting the 0.73 neighbourhood in the next weeks.
Key Quotes
24-hour view: “We highlighted yesterday that ‘while improved upward momentum suggests AUD could strengthen further, overbought conditions indicate a sustained advance above 0.7250 is unlikely’. We added, ‘the next resistance is at 0.7280’. AUD subsequently popped to a high of 0.7265, dropped sharply back down to 0.7216 before snapping back up. While the choppy swings have resulted in a mixed outlook, the underlying tone remains firm and AUD could edge higher and test the solid resistance at 0.7280. For today, a clear break of 0.7300 appears unlikely. Support is at 0.7220 followed by 0.7200.”
Next 1-3 weeks: “Yesterday (18 Aug, spot at 0.7215), we indicated that ‘upward momentum is improving but only a daily closing above 0.7280 would indicate AUD is ready to move above 0.7300’. We added, ‘for now, the prospect for AUD to close above 0.7280 is not high but it would continue to increase as long as AUD does not move below 0.7150 within these few days’. AUD subsequently popped to a high of 0.7265 before ending the day on a firm note at 0.7244 (+0.39%). From here, there is no change in our view but the odds for AUD to move clearly above 0.7300 have increased considerably. That said, we still prefer to wait for an added confirmation of a daily closing above 0.7280. On the downside, a breach of 0.7170 (‘strong support’ level was at 0.7150 yesterday) would indicate that AUD is not ready to move higher just yet. Looking forward, the next resistance level of note above 0.7300 is at 0.7390.”
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