Australian Dollar (AUD) could test 0.6660 before a pullback is likely; the major resistance at 0.6685 is likely out of reach. In the longer run, further AUD strength is not ruled out; it remains to be seen if 0.6685 is within reach, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Further AUD strength is not ruled out
24-HOUR VIEW: “We indicated yesterday that AUD ‘appears to have entered a consolidation phase between 0.6605 and 0.6645’. However, after dipping briefly to 0.6610, AUD rebounded to a high of 0.6655 before closing at 0.6643 (+0.28%). Despite the relatively strong rebound, upward momentum has not increased significantly. That said, AUD could test 0.6660 before a pullback is likely. The major resistance at 0.6685 is likely out of reach. To sustain the momentum buildup, AUD must hold above 0.6615, with minor support at 0.6625.”
1-3 WEEKS VIEW: “Tracking our positive AUD view since late last month, we highlighted two days ago (08 Dec, spot at 0.6635) that ‘while further AUD strength is not ruled out, the advance that started late last month appears to be overstretched, and it remains to be seen whether momentum is strong enough to reach the next resistance at 0.6685’. While AUD eked out a new high of 0.6655 yesterday, there has been no significant increase in momentum. To put it another way, our view remains unchanged. Overall, only a breach of 0.6590 (no change in ‘strong support’ level) would indicate that the outlook for AUD has turned to neutral.”