AUD/USD: Further upside lies ahead near term – UOB

In light of the recent price action, further recovery in AUD/USD appears well on the cards for the time being, note UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “We did not expect the strong surge in AUD that sent it to a high of 0.6412 (we were expecting sideway-trading). While overbought, the rapid rise in AUD could test 0.6420 first before the risk of a pullback increases. AUD is unlikely to challenge the major resistance at 0.6460. Support is at 0.6365 but only a break of 0.6340 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Yesterday (25 Oct, spot at 0.6330), we noted that the underlying tone for AUD appears to have firmed. We indicated that AUD has to move and stay above 0.6410 before a sustained advance is likely. AUD subsequently rose to 0.6412 before closing on a strong note at 0.6394 (+1.28%). Upward momentum has improved and AUD is likely to edge higher to the major resistance at 0.6460. On the downside, a break of the ‘strong support’ at 0.6305 (level was at 0.6220 yesterday) would indicate that the build-up in momentum has fizzled out.”