Australian Dollar (AUD) could break above 0.6305; the next major resistance at 0.6350 is likely out of reach for now. In the longer run, current price action is likely the early stages of a recovery phase that could potentially reach 0.6350, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Below 0.6190, the current momentum is going to fade

24-HOUR VIEW: “When AUD was at 0.6195 yesterday, we expected it to ‘trade in a 0.6165/0.6220 range.’ Instead of trading in a range, AUD jumped, surging to a high of 0.6287. The impulsive momentum is likely to outweigh the overbought conditions. Today, provided that 0.6205 (minor support is at 0.6240) is not breached, AUD could break above 0.6305. The next major resistance at 0.6350 is likely out of reach for now.”

1-3 WEEKS VIEW: “We noted yesterday (20 Jan, spot at 0.6195) that the recent ‘buildup in upward momentum seems to have faded.’ We indicated that AUD ‘for the time being, AUD is likely to trade in a 0.6140/0.6245 range.’ Our shift to a neutral stance was ill-timed, as AUD lifted and broke the significant resistance at 0.6245. The current price action is likely the early stages of a recovery phase that could potentially reach 0.6350. To keep the momentum going, AUD must not break below 0.6190.”