Set to break above 0.6815 in the short term – UOB Group

The Australian dollar (AUD) may rise, but any advance is likely limited to a test of 0.6815. Longer-term, wild advance suggests further AUD strength; given the overbought conditions, it remains to be seen whether 0.6870 is within reach, note UOB Group FX strategists Quek Ser Leang and Lee Sue Ann.

Resistance at 0.6870 may be inaccessible

24 HOUR OUTLOOK: “AUD traded between 0.6762 and 0.6796 yesterday, higher than our expected sideways trading range of 0.6750/0.6790. The price action led to a slight increase in the upside momentum. There is scope for the AUD to move higher today, but any advance is likely limited to a test of 0.6815. Major resistance at 0.6870 is unlikely to be threatened. On the downside, a break of 0.6760 (minor support is at 0.6775) would indicate that the current mild upward pressure has eased.”

WEEKS 1-3: “Our update from Monday (August 26, spot at 0.6790) still stands. As indicated, while last Friday’s huge advance suggests further AUD strength 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, if the AUD breaks ‘strong support’ at 0.6730 (previous level at 0.6710), it would suggest no further consolidation.”