Australian Dollar (AUD) is likely to strengthen further but is unlikely to reach 0.6700. In the longer run, the price action continues to suggest a higher AUD; the next level to watch is 0.6700, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Price action continues to suggest a higher AUD

24-HOUR VIEW: "AUD rose to a high of 0.6639 on Wednesday. Yesterday, Thursday, we pointed out that 'despite the advance, we did not detect a significant increase in upward momentum.' However, we indicated that 'there is a chance for AUD to test 0.6645 before the risk of a pullback increases.' We added, 'support levels are at 0.6600 and 0.6585.' We did not expect the volatile price action, as AUD dropped to a low of 0.6591 and then staged a surprisingly sharp rally that reached a high of 0.6665. Strong momentum indicates likely further strengthening of AUD, but overbought conditions suggest that 0.6700 is likely out of reach for now. Today’s support levels are at 0.6640 and 0.6620."

1-3 WEEKS VIEW: "We turned positive on AUD early this week (as annotated in the chart below). Tracking the subsequent advance, we highlighted yesterday (11 Sep, spot at 0.6615), that 'momentum indicators still point to a higher AUD, but with conditions quickly approaching overbought levels, it remains to be seen if the next resistance at 0.6670 will come into view.' We did not quite expect AUD to soar to a high of 0.6665. The price action continues to suggest a higher AUD, and the next level to watch above 0.6670 is 0.6700. On the downside, the ‘strong support’ level is now at 0.6590, up from yesterday’s level of 0.6560."