According to UOB Group FX strategists Quek Ser Leang and Lee Sue Ann, there is a possibility for the Australian Dollar (AUD) to edge higher in the short term, but any potential advance is likely to be capped around the 0.6815 level. Despite signs of strength in the longer run, the overbought conditions raise questions about the AUD’s ability to surpass the key resistance level at 0.6870.
Analyzing the Technical Outlook
24-HOUR VIEW: The recent price action has shown a slight increase in upward momentum, with AUD trading between 0.6762 and 0.6796. While there is room for further upside towards 0.6815, the major resistance at 0.6870 is likely to remain unbreached. A break below 0.6760 would indicate a weakening of the current upward pressure.
1-3 WEEKS VIEW: Despite the potential for further strength in the AUD, the overbought conditions suggest caution. The outlook for the next 1 to 2 weeks hinges on the AUD’s ability to break above the 0.6870 resistance level. However, a breach of the strong support at 0.6730 could signal a reversal in the AUD’s upward trajectory.
Breaking Down the Implications
For investors and traders, the AUD’s short-term outlook suggests limited upside potential towards 0.6815, with a key resistance level at 0.6870. The longer-term strength in the AUD remains uncertain due to overbought conditions, highlighting the need for caution. A breach below 0.6730 could signal a reversal in the AUD’s upward trend, impacting investment decisions and portfolio strategies.