AUD/USD still faces upside risks – UOB

Despite navigating overbought levels, AUD/USD could still edge higher in the near term, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “In yesterday update, we cited “there is room for AUD to test the 0.6880 level first before a pull-back can be expected”. AUD surprised our bullish expectations with an overnight high of 0.6905. The undertone is clearly positive but the rally seems to be running ahead of itself. Expect strong resistance at 0.6920/0.6930 area. Support is now at 0.6865 and only a move below 0.6840 would indicate the current upward pressure has eased”.

Next 1-3 weeks: “In yesterday’s update, we mentioned that “AUD has to register a NY closing above the major 0.6900 level before a sustained advance can be expected”. AUD closed at 0.6904 overnight and continue to push higher in early Asian trade today to new 3-mth highs. From here, resistances are 0.6950 and 0.6970. Despite the risks now skewed to the upside, AUD is overbought. A pullback towards 0.6850 is a welcomed development as part of a more sustainable advance in the future. On the downside, only a break below 0.6820 would indicate that the upward pressure has eased”.