0.6800 resistance may be unreachable – UOB Group

Conditions are severely overbought, but there appears to be enough momentum for the Australian dollar (AUD) to break clear above 0.6800, but given the overbought conditions, it remains to be seen whether 0.6870 is within reach, UOB Group FX Strategies Quek Ser Leang and Note Lee Sue Ann.

A break above 0.6800 is becoming increasingly unlikely

24 HOUR VIEW: “We did not expect the AUD to rise 1.37% (NY close at 0.9797) last Friday. The 1.37% rise is the biggest 1-day advance this year. Predictably, after such a strong rally in a short period of time, conditions are severely overbought. However, there seems to be enough momentum for the AUD to break clear above 0.6800. The next resistance at 0.6870 is highly unlikely to occur today. There is another resistance at 0.6830. On the downside, any pullback is not expected to threaten support at 0.6745 with minor support at 0.6760.”

WEEKS 1-3: “In our most recent narrative last Thursday (August 22 at 0.6750), we indicated that “while the upward momentum has slowed somewhat, it is too early to call for an end to the advance in the AUD. .’ I added, “provided the ‘strong support’ level at 0.6660 is not removed, the AUD could continue to advance, possibly to last month’s high near 0.6800.” Last Friday, the AUD jumped to a pip of 0.6800, hitting a high of 0.6799. The huge advance continues to suggest further AUD strength. However, given the overbought conditions, it remains to be seen whether 0.6870 is within reach in the next 1 to 2 weeks. On the downside, the ‘strong support’ level rose to 0.6710 from 0.6660.”