Scope for a stronger recovery in AUD/USD – UOB

FX Strategists at UOB Group noted the likeliness that the Aussie Dollar could extend further its march north in the next weeks.

Key Quotes

24-hour view: “AUD traded in a relatively quiet manner yesterday, holding within a 0.7248/0.7281 range. The underlying tone has weakened somewhat with the subsequent soft daily closing (NY close of 0.7252) and the immediate bias is tilted to the downside. That said, any weakness is unlikely to seriously threaten the major 0.7220 support (next support is at 0.7200). Resistance is at 0.7280 but only a break above 0.7300 would indicate that the current mild downward pressure has eased”.

Next 1-3 weeks: “We have held the same view since last Thursday (20 Sep, spot at 0.7260) wherein the “risk of a stronger recovery in AUD has increased”. AUD subsequently hit a high of 0.7305 on Friday (21 Sep) before easing off. While upward pressure has waned somewhat with the pullback from 0.7305, there is still room for the current recovery to extend to 0.7360. That said, any advance is expected to be slow and grinding. On the downside, only a break of 0.7220 (no change in ‘key support’ level) would indicate that a short-term top is in place”.