Unlikely to break above 0.6930 – UOB Group

The Australian Dollar (AUD) could edge higher, but it is unlikely to be able to break above 0.6930. In the longer run, AUD has to break and remain above 0.6930 before an advance to 0.6980 can be expected, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD has to remain above 0.6930 to advance towards 0.6980

24-HOUR VIEW: “We highlighted yesterday that AUD ‘could dip below 0.6800 before stabilisation can be expected.’ However, AUD rebounded strongly, reaching a high of 0.6905. The strong rebound has resulted in an increase in momentum, albeit not much. Today, we expect AUD to edge higher, but it is unlikely to be able to break above 0.6930. Support is at 0.6875; a breach of 0.6840 would mean that the current mild upward pressure has eased.”

1-3 WEEKS VIEW: “After holding a positive AUD view for more than a week, we shifted to a neutral stance yesterday (26 Sep, spot at 0.6825), indicating that ‘the advance in AUD has come to an end, and it is likely to trade between 0.6750 and 0.6900 for now.’ We did expect AUD to reverse its decline as it soared to a high of 0.6905. Despite the advance, upward momentum has not increased sufficiently to indicate that AUD is ready to rise in a sustained manner. AUD has to break and remain above 0.6930 before an advance to 0.6980 can be expected. The chance of AUD breaking clearly above 0.6930 will remain intact, provided that it stays above 0.6820.”