AUD/USD faces a tough resistance around 0.6915/40 – UOB

In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, the ongoing strong upside momentum in AUD/USD is expected to meet solid resistance in the 0.6915/40 band.

Key Quotes

24-hour view: The strong surge in AUD to a high of 0.6893 came as a surprise (we were expecting it to consolidate). There is room for AUD to strengthen further but overbought conditions suggest a break of 0.6915 is unlikely today. There is another rather strong resistance at 0.6940. A breach of 0.6830 (minor support is at 0.6850) indicates the current upward pressure has eased. 

Next 1-3 weeks: The pace of the advance in AUD continues to surprise us. Yesterday (15 Jun, spot at 0.6800), we indicated that AUD “is likely to strengthen further” but we were of the view that “the next target 0.6860 might not come into view so soon”. However, AUD surged to a high of 0.6893 in NY trade. Despite the rally in AUD that started last week is severely overbought, it is too early to expect a reversal. That said, the solid resistance zone between 0.6915 and 0.6940 might not be easy to break. All in all, only a breach of 0.6790 (‘strong support’ level was at 0.6735 yesterday) would indicate that AUD is not advancing further.