The Australian Dollar (AUD) is likely to trade in a sideways range of 0.6780/0.6840. In the longer run, there is still room for AUD to rise further, but there may not be enough momentum for it to challenge 0.6870, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD rangebound between 0.6780 and 0.6840

24-HOUR VIEW: “Yesterday, we held the view that AUD ‘could trade in a range between 0.6735 and 0.6800.’ We did not anticipate the subsequent volatility, as after dipping to 0.6738, AUD soared and broke above the solid resistance zone of 0.6820/0.6825 (high of 0.6839). AUD pulled back from the high, closing at 0.6815 (+0.75%). The pullback in overbought conditions suggests AUD is unlikely to weaken much further. Today, AUD is more likely to trade in a sideways range of 0.6780/0.6840.”

1-3 WEEKS VIEW: “We indicated yesterday (19 Sep, spot at 0.6770) that ‘there is room for AUD to rise further, but the 0.6820/0.6825 solid resistance zone may be difficult to break.’ However, AUD easily took out the resistance zone, as it soared to a high of 0.6839. While there is still room for AUD to continue to rise, at this time, it may not have enough momentum to challenge to significant resistance at 0.6870. On the downside, a breach of 0.6740 (‘strong support’ level was at 0.6715 yesterday) would mean that the current upward momentum has faded.”