The increase in upward momentum is likely to lead to Australian Dollar (AUD) trading in a higher range of 0.6685/0.6730 rather than a sustained advance. In the longer run, AUD is likely to range-trade for now, most likely between 0.6640 and 0.6730, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

AUD is likely to range-trade for now

24-HOUR VIEW: "When AUD was at 0.6685 in the early Asian session yesterday, we indicated that it 'may drift lower and test 0.6670'. We also indicated that 'while a break below this level is not ruled out, based on the current momentum, any further decline is unlikely to reach the major support at 0.6640'. While our view was not wrong, as AUD fell to a low of 0.6663, we did not anticipate the subsequent sharp rebound to a high of 0.6719. The increase in momentum is not strong enough to indicate a sustained advance. Instead, AUD is more likely to trade in a higher range of 0.6685/0.6730 today."

1-3 WEEKS VIEW: "The following are excerpts from our update yesterday (05 Jan, spot at 0.6685). 'Although AUD soared late last month to a 14-month high of 0.6727, it has since struggled to build on those gains. Upward momentum has eased, and this, combined with overbought conditions, suggests AUD is likely to range-trade for now, most likely between 0.6640 and 0.6730'. Although upward momentum has renewed somewhat with the sharp rebound yesterday, it is not sufficient to indicate a continued rise just yet. In other words, we continue to hold the same view for now."