Break above 0.6930 unlikely – UOB Group

The Australian Dollar (AUD) could rise, but is unlikely to break above 0.6930. In the longer term, the AUD needs to break and hold above 0.6930 before an advance to 0.6980 can be expected, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

AUD needs to stay above 0.6930 to advance towards 0.6980

24-HOUR OUTLOOK: We pointed out yesterday that the AUD “could fall below 0.6800 before stabilization can be expected”. However, the AUD bounced back strongly, hitting a high of 0.6905. The strong rebound led to an increase in momentum, though not by much. Today, we expect the AUD to rise, but it is unlikely that it will be able to break above 0.6930. Support is at 0.6875; a break of 0.6840 would mean that the current mild upside pressure has subsided.”

VIEW 1-3 WEEKS: “After taking a positive view on the AUD for more than a week, we switched to a neutral position yesterday (September 26, point at 0.6825), indicating that the “advance in the AUD has ended and it is likely to trade between 0.6750 and 0.6900 for now.’ We expected the AUD to reverse its decline as it climbed to a high of 0.6905. Despite the progress, the upward momentum has not increased enough to indicate that the AUD is poised to rise in a sustained manner. AUD needs to break and hold above 0.6930 before an advance to 0.6980 can be expected. The chance of the AUD breaking clear above 0.6930 will remain intact, provided it remains above 0.6820.”