AUD/USD outlook now shifted to bullish – UOB

In light of the recent price action in the pair, FX Strategists at UOB Group shifted their near term stance to bullish from neutral.

Key Quotes

24-hour view: “The abrupt surge in AUD yesterday came as a surprise as it sliced through several strong resistance levels with ease (most notably the major 0.7645 level). In view of the strong and impulsive rally, further upward extension would not be surprising. From here, a move above the overnight high of 0.7666 seems likely but a break above 0.7700 is not expected for now. Support is at 0.7630 followed by 0.7600”.

Next 1-3 weeks: “While we have held a positive AUD view since last Thursday (31 May, spot at 0.7575) and indicated that the “immediate bias is for a test of 0.7605”, the abrupt surge higher yesterday that easily took out not only 0.7605 but the major 0.7645 level was not exactly expected (note that AUD closed higher by +1.05% yesterday, the second largest 1-day gain this year). The clear break of the major 0.7645 level suggests the start of a bullish phase even though AUD is unlikely able to maintain the current pace of gains. There is another major resistance at 0.7700 and this level may not come into the picture so soon. On a shorter-term note, severely overbought conditions could lead to a pullback first but only a break below 0.7570 (‘stop-loss’ level) would indicate that our bullish view is wrong”.