AUD/USD: Further upside likely while above 0.6610 – UOB

AUD/USD is expected to advance beyond 0.6700 while above the 0.6610 region, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “The strong surge in AUD that sent it to a high of 0.6717 came as a surprise (we were expecting AUD to consolidate). The sharp and rapid pullback from the high in overbought conditions suggests the advance is overdone. In other words, AUD is unlikely to advance further. Today, AUD is more likely to trade sideways, expected to be between 0.6630 and 0.6705.”

Next 1-3 weeks: “Last Wednesday (26 Apr, spot at 0.6635), we indicated that ‘downward momentum is beginning to build’ and we were of the view that AUD ‘is likely to edge lower but any decline is likely to face solid support at the year-to-date low near 0.6565’. After AUD dropped briefly to 0.6575 last Friday and rebounded, we highlighted yesterday (02 May, spot at 0.6630) that ‘while downward momentum has waned, there is still a slim chance for AUD to test the 0.6565 level’. We did not anticipate the surge in AUD that sent it to a high of 0.6717. Downward momentum has faded and upward momentum is beginning to build, albeit tentatively. From here, as long as AUD holds above 0.6610 (current level of ‘strong support’), it could edge higher to 0.6740. At this stage, the odds of a sustained rise above 0.6740 are not high.”