United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann noted that the Australian Dollar (AUD) extended its recent gains on Tuesday, driven by an improved risk appetite. However, they described the near-term move as only a tentative recovery. Intraday, they expect the AUD to edge higher within a narrow band, while maintaining a neutral stance over the next 1-3 weeks, forecasting sideways trade between nearby support and resistance levels.
The AUD closed 0.30% higher at 0.6972 yesterday. The strategists anticipated the AUD would stay within a 0.6945/0.6985 range today, but the subsequent price movements did not fully align with their expectations. The AUD climbed to 0.6990 before settling at 0.6984, showing only a slight increase in upward momentum. Today, they expect the AUD to trade within a 0.6965/0.6995 range.
Looking ahead, the strategists previously held a negative view on the AUD from mid-last month but highlighted last Friday that any further decline may fall short of the major support at 0.6866. Yesterday, they noted that downward momentum was slowing, and a break above 0.6985 would indicate that 0.6866 is out of reach. The AUD subsequently rose and broke above 0.6985, reaching a high of 0.6990. With this move, the strategists have shifted to a neutral outlook, expecting the AUD to trade between 0.6935 and 0.7020 over the coming weeks.