Instead of strengthening further, the Australian Dollar (AUD) is likely to trade in a 0.6740/0.6785 range instead. Room for AUD to continue to rise, but it has to surpass 0.6800 before further advance can be expected, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

AUD has to surpass 0.6800 to continue growing

24-HOUR VIEW: “While we expected AUD to strengthen yesterday, we indicated that ‘any advance is unlikely to reach 0.6800.’ AUD subsequently rose, but it came close to reaching 0.6800 (high has been 0.6799). AUD pulled back from the high and closed slightly higher (0.6760, +0.19%). The pullback in overbought conditions suggest that instead of strengthening further today, AUD is likely to trade in 0.6740/0.6785 range instead.”

1-3 WEEKS VIEW: “We turned positive in AUD early last week. In our most recent narrative from Monday (08 Jul, spot at 0.6745), we highlighted that ‘increasing upward momentum suggests AUD is likely to continue to rise to 0.6800.’ Yesterday, AUD rose to within one pip of 0.6800, reaching a high of 0.6799. While there is room for AUD to continue to rise, it has to surpass 0.6800 before further advance can be expected. Given the overbought conditions, it remains to be seen if AUD can break above 0.6800 in the next few days. Overall, only a breach of 0.6725 (‘strong support’ level was at 0.6700 yesterday) would indicate that the AUD strength has come to an end.”