Advance expected to face strong resistance at 0.6620 – UOB Group

The Australian Dollar (AUD) is likely to trade with an upward bias; any advance is expected to face strong resistance at 0.6620. In the longer run, month-long AUD weakness has stabilised; AUD is expected to trade in a 0.6535/0.6655 range for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Month-long AUD weakness seems stabilised

24-HOUR VIEW: “We expected AUD to trade in a range between 0.6550 and 0.6600 last Friday. AUD then traded in a narrower range of 0.6554/0.6591, closing at 0.6560. It gapped higher upon opening today. There has been a slight increase in upward momentum, and AUD is likely to trade with an upward bias. However, any advance is expected to face strong resistance at 0.6620. Support is at 0.6570, followed by 0.6555.”

1-3 WEEKS VIEW: “We have held a negative AUD view since early last month. In our most recent narrative from last Wednesday (30 Oct, spot at 0.6565), we pointed out that ‘Although the weakness has not stabilised, given that the current decline is entering its second month, the potential for further sustained weakness may be limited.’ We also pointed out that ‘The next level to monitor is 0.6520, and only a breach of 0.6620 (‘strong resistance’ level) would mean that the weakness in AUD has stabilised.’ AUD gapped higher upon opening today and rose above 0.6600. Although our ‘strong resistance’ level has not been clearly breached, downward momentum has largely faded. To look at it another way, the month-long AUD weakness has stabilised. From here, AUD is expected to trade in range, likely between 0.6535 and 0.6655.”