Conditions are approaching overbought, but Australian Dollar (AUD) could test the 0.6570 level before the risk of a pullback increases. In the longer run, there has been a tentative buildup in momentum; AUD could rise to 0.6575, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
A tentative buildup in momentum
24-HOUR VIEW: “Following the rise in AUD that reached 0.6541 two days ago, we indicated yesterday that ‘while there has been no significant increase in upward momentum, AUD could rise further.’ However, we were of the view that ‘any advance is unlikely to reach the major resistance at 0.6555.’ AUD then rose more than expected, reaching a high of 0.6563. While conditions are approaching overbought, AUD could test 0.6570 before the risk of a pullback increases. We do not expect 0.6600 to come into view today. On the downside, support levels are at 0.6535 and 0.6520.”
1-3 WEEKS VIEW: “Our most recent narrative was from Monday (11 Aug, spot at 0.6520), in which we indicated that ‘while we continue to expect range trading, a narrower range of 0.6470/0.6555 is likely enough to contain the price movements for now.’ Yesterday (Wednesday), AUD rose above 0.6555, closing at 0.6545. There has been a tentative buildup in momentum, and AUD could rise to 0.6575, as long as the ‘strong support’ level, currently at 0.6500 holds. Looking ahead, if AUD were to break above 0.6570, the next level to watch is 0.6600.”
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