Set to test 0.6940 before a pullback is likely – UOB Group

Room for the Australian Dollar (AUD) to test 0.6940 before a pullback is likely. In the longer run, AUD is likely to edge higher; it remains to be seen if there is enough momentum for it to reach 0.6980, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD is likely to edge higher towards 0.6980

24-HOUR VIEW: “We highlighted last Friday that AUD ‘could edge higher, but it is unlikely to be able to break above 0.6930.’ AUD then rose more than expected to 0.6937 before pulling back to close largely unchanged at 0.6902 (+0.09%). Although upward momentum has not increased much, there is room for AUD to test 0.6940 today before another pullback is likely. The major resistance at 0.6980 is not expected to come under threat. Support levels are at 0.6890 and 0.6870.”

1-3 WEEKS VIEW: “Last Thursday (26 Sep, spot at 0.6825), we indicated that ‘the advance in AUD has come to an end, and it is likely to trade between 0.6750 and 0.6900 for now.’ After AUD rose above to 0.6905, we indicated on Friday (27 Sep, spot at 0.6890) that ‘upward momentum has not increased sufficiently to indicate that AUD is ready to rise in a sustained manner.’ We added, ‘AUD has to break and remain above 0.6930 before an advance to 0.6980 can be expected.’ AUD subsequently rose to 0.6937, pulling back to close at 0.6902 (+0.09%). Although upward momentum has not increased as much as we would prefer, the price action suggests that AUD is likely to edge higher from here. However, it remains to be seen if there is enough momentum for AUD to reach 0.6980. On the downside, the ‘strong support’ level has moved higher to 0.6845 from 0.6820.”