Recent strength loses traction – UOB

Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group see the upside momentum in AUD/USD losing momentum for the time being.

Key Quotes

24-hour view: After AUD dropped to 0.6788 on Monday and rebounded, we indicated yesterday that “despite the decline, there is no clear increase in downward momentum, and AUD is unlikely to weaken much further.” We expected AUD to trade sideways between 0.6785 and 0.6855. Our view of sideways trading was not wrong, as AUD traded between 0.6789 and 0.6837 before ending the day largely unchanged (0.6812, -0.07%). Today, AUD could continue to trade sideways, likely between 0.6785/0.6845.

 

Next 1-3 weeks: Our update from yesterday (18 Jul, spot at 0.6815) is still valid. As highlighted, the recent buildup in momentum is beginning to wane. A breach of the ‘strong support’ at 0.6760 (no change in level) would indicate that the major resistance at 0.6900 is not coming into view.