In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, further upside could encourage AUD/USD to reclaim the area above the 0.7000 barrier in the short term.

Key Quotes

24-hour view: “We expected AUD to strengthen yesterday but we were of the view that ‘any advance is expected to face solid resistance at 0.6950’. However, in NY trade, AUD took out 0.6950 without much difficulty as it soared to a high of 0.6984. Despite the advance, there is no significant improvement in upward momentum. That said, as long as AUD stays above 0.6920 (minor support is at 0.6940), it could rise above 0.7000. While AUD could break 0.7000, it is not expected to challenge the next major resistance at 0.7070.”

Next 1-3 weeks: “Our latest narrative was from Tuesday (10 Jan, spot at 0.6910) where we highlighted that while momentum continues to point to a higher AUD, it must break and stay above 0.6950 before a move to 0.7000 is likely. AUD soared above 0.6950 yesterday before closing at 0.6967 (+0.88%). The price actions suggest AUD is likely to advance above 0.7000. As there is no marked improvement in momentum for now, the next resistance at 0.7070 is unlikely to come into view so soon. On the downside, a break of 0.6890 (‘strong support’ level was at 0.6835 yesterday) would indicate that AUD is not advancing further.”