Strong momentum suggests Australian Dollar (AUD) could continue to rise; with negative divergence forming, any advance is unlikely to reach 0.6625. In the longer run, rapid improvement in upward momentum indicates that AUD may revisit the year-to-date high of 0.6625, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
AUD might continue to rise
24-HOUR VIEW: «The continued strong advance in AUD, which reached a high of 0.6598 was surprising, as we were expecting a pullback. While strong momentum suggests AUD could continue to rise, with negative divergence forming, any advance is unlikely to reach the significant resistance level at 0.6625. Note that there is another resistance level at 0.6610. To keep the momentum going, AUD must stay above 0.6560, with minor support at 0.6575.»
1-3 WEEKS VIEW: «Yesterday (08 Sep, spot at 0.6550), we highlighted that ‘there is a chance for AUD to rise toward the resistance at 0.6595, but it is unlikely to break clearly above this level.’ We did not expect AUD to rise quickly above 0.6595 and reach a high of 0.6598. The rapid improvement in upward momentum indicates that AUD may revisit the year-to-date high of 0.6625. The upside risk will remain intact as long as AUD holds above 0.6540 (‘strong support’ level was at 0.6515 yesterday).»