There is scope for Australian Dollar (AUD) to test 0.6750 before the risk of a pullback increases; 0.6770 is not expected to come into view. In the longer run, AUD could edge higher, but it remains to be seen if it can reach 0.6770, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

AUD might edge higher

24-HOUR VIEW: "Two days ago, AUD dropped to 0.6663 and then rebounded sharply. Yesterday, when AUD was at 0.6710, we highlighted the following: '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'. The subsequent price movements did not turn out as expected. AUD rose to a high of 0.6742 and then closed at 0.6738, up by 0.32%. Despite the advance, there has been no clear increase in upward momentum. However, there is scope for AUD to test 0.6750 before the risk of a pullback increases. We do not expect the major resistance at 0.6770 to come into view. To keep the momentum going, AUD must hold above 0.6705, with minor support at 0.6715."

1-3 WEEKS VIEW: "We highlighted on Monday (05 Jan, spot at 0.6710) that AUD 'is likely to range-trade for now, most likely between 0.6640 and 0.6730'. Although AUD broke above 0.6730 yesterday (high of 0.6742), upward momentum only increased slightly. That said, AUD could edge higher, but it remains to be seen if it can reach 0.6770. Note that there is another resistance level at 0.6750. On the downside, if AUD breaks below the ‘strong support’ level, now at 0.6690, it would mean that the current mild upward pressure has eased."