Break above 0.6740 to stabilize the AUD – UOB Group

The Australian Dollar (AUD) is likely to trade in a 0.6685/0.6730 range. In the longer run, downward momentum is slowing rapidly; a breach of 0.6740 would mean that the weakness in AUD has stabilized, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Likely to trade in a 0.6685/0.6730 range

24-HOUR VIEW: “We expected AUD to trade in a 0.6680/0.6725 range last Friday. It subsequently traded between 0.6694 and 0.6719, closing slightly higher at 0.6707 (+0.16%). Further range trading appears likely today, even though the slightly firmed underlying tone suggests a higher range of 0.6685/0.6730 range.”

1-3 WEEKS VIEW: “We turned negative in AUD early this month (as annotated in the chart below). After AUD dropped sharply to 0.6659, in our latest narrative from last Wednesday (16 Oct, spot at 0.6680), we indicated that ‘the rapid increase in momentum is likely to lead to further AUD weakness.’ However, AUD has not been able to make further headway on the downside since then. Downward momentum is slowing rapidly, and a breach of 0.6740 (no change in level in ‘strong resistance’ level) would mean that the AUD weakness has stabilised.”