AUD/USD neutral now, further consolidation likely – UOB

FX Strategists at UOB Group shifted their outlook to neutral from bearish, while further consolidation is expected in the near term.

Key Quotes

24-hour view: “While we highlighted the weak downward momentum yesterday and were of the view that a break of 0.7650 is unlikely, the subsequent sharp and swift rally from a low of 0.7672 was unexpected. Upward momentum remains strong and a move above the overnight high of 0.7780 could lead to another up-leg towards 0.7810. At this stage, we do not anticipate a sustained move above this level. Support is at 0.7745 followed by 0.7710”.

Next 1-3 week: “The shift to a bearish stance yesterday was ill-timed as AUD staged a surprisingly strong rally and took out the ‘stop-loss’ level at 0.7770. The 0.7672 low yesterday is likely a short-term bottom and the current movement is viewed as the start of consolidation phase. In other words, AUD is expected to trade sideways for now, likely within a broad 0.7680/0.7860 range”.