Australian Dollar: UOB sees bias return to neutral against US Dollar

A break below strong support has weakened AUD/USD’s earlier bullish momentum and reversed its recent overbought advance, according to United Overseas Bank strategists Quek Ser Leang and Lee Sue Ann. They now expect the pair to trade within a defined consolidation range, with near-term risks skewed modestly to the downside. Over the medium term, however, signals continue to suggest scope for a broader decline towards previous multi-month lows.

Australian Dollar Faces Range-Bound Trading

"24-HOUR VIEW: After AUD rose more than we expected two days ago, we highlighted the following yesterday: “AUD rose more than expected to 0.7065 before settling at 0.7055 (+0.42%). While conditions are overbought, AUD could test 0.7070 today. Given the overbought conditions, a continued rise above this level appears unlikely.” While AUD subsequently rose to 0.7068, it then fell sharply to 0.7015. AUD closed on a soft note at 0.7028 (-0.38%). The slight increase in downward momentum suggests the bias is on the downside today. That said, any decline should stay within a 0.7005/0.7050 range."

"1-3 WEEKS VIEW: We turned positive on AUD in the middle of last week. Yesterday (29 Oct, spot at 0.7025), we highlighted that “while the renewed momentum suggests AUD could move above 0.7070, it is too early to tell whether it can strengthen sufficiently to carry AUD toward 0.7095.” However, after rising to 0.7068, AUD fell and broke below our ‘strong support’ level at 0.7020. Upward momentum has faded, and the outlook for AUD is neutral now. From here, we expect it to trade in a range of 0.6985/0.7070."

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