Extra gains in AUD/USD need to surpass 0.7050/70 – UOB
In opinion of FX Strategists at UOB Group, AUD/USD could extend the upside above the 0.7050/70 band.
24-hour view: “AUD traded between 0.6996 and 0.7025 yesterday, narrower than our expected sideway trading range of 0.6995/0.7040. Momentum indicators are still mostly ‘neutral’ and we continue to expect AUD to trade sideways for now, likely between 0.7000 and 0.7040”.
Next 1-3 weeks: “There is no change to our view from Tuesday (16 Jul, spot at 0.7040). As highlighted, while upward momentum has improved, we have doubts about the sustainability of the advance in AUD. The concern is primarily due to the major resistance zone of 0.7050/70. The 0.7050 level was tested a few times in the past couple of months and held (see annotations in chart below). The 0.7070 level is the minor peak in April as well as a declining trend-line resistance (not visible in the chart below). The price action in AUD over the past couple of days appears to suggest that AUD is ‘hesitating’ below this major resistance zone. That said, the risk for an upside break is still intact as long as 0.6980 is not taken out (no change in level from Tuesday). Looking ahead, if AUD were to move and stay above 0.7070, it would suggest last month’s 0.6832 low could be a significant bottom and AUD could move beyond the next major resistance at 0.7110 in the coming weeks”.