Breaking 0.6815 in the short term – UOB Group

The Australian dollar (AUD) has room to rise, but any gains are likely to be limited to a test of 0.6815. Longer-term, an outsized rise would signal further AUD strength; given overbought conditions, it remains to be seen whether 0.6870 is within reach, note Quek Ser Leang and Lee Sue Ann, FX strategists at UOB Group.

The resistance of 0.6870 may be out of range

24-HOUR FORECAST: “AUD traded between 0.6762 and 0.6796 yesterday, above our expected sideways trading range of 0.6750/0.6790. The price action has resulted in a slight increase in upside momentum. Today, there is scope for AUD to move higher, but any advance is likely to be limited to a test of 0.6815. The major resistance at 0.6870 is unlikely to be threatened. On the downside, a break of 0.6760 (minor support is at 0.6775) would indicate that the current mild upward pressure has eased.”

1-3 WEEK VIEW: “Our update from Monday (Aug 26, spot at 0.6790) still holds. As noted, while last Friday’s outsized rally suggests further AUD strength given the overbought conditions, it remains to be seen whether 0.6870 is within reach in the next 1-2 weeks. On the downside, if AUD breaks through the ‘strong support’ at 0.6730 (previously at 0.6710), this would indicate that it is not strengthening further.”