Scope for further Australian Dollar (AUD) strength against the US Dollar (USD), but any advance is likely part of a higher range of 0.6420/0.6515. In the longer run, to continue to rise, AUD must break and hold above 0.6515, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

AUD must break and hold above 0.6515 to rise

24-HOUR VIEW: "We noted 'a slight increase in downward momentum' yesterday, and we expected AUD to 'test 0.6350.' We highlighted that 'the major support at 0.6330 is unlikely to come under threat.' AUD then dipped to 0.6362 before staging a surprisingly sharp rally, reaching a high of 0.6479. Strong momentum suggests there is scope for further AUD strength. However, overbought conditions indicate that any advance is likely part of a higher 0.6420/0.6515 range. In other words, AUD is unlikely to break clearly above last week’s high of 0.6515."

1-3 WEEKS VIEW: "Our most recent narrative was from last Friday (09 May), when AUD was at 0.6400. In the update, we indicated that 'the increase in momentum is not enough to suggest a sustained decline just yet, and AUD must break and hold below 0.6370 before a move to 0.6330 can be expected.' While AUD subsequently dropped below 0.6370, it did not close below this level. Yesterday, AUD rallied, closing at 0.6472, up sharply by 1.57%. The breach of our ‘strong resistance’ level of 0.6460 indicates that the chance of AUD breaking lower has dissipated. After the sharp rally, upward momentum has strengthened, but this time around, it is not enough to indicate a sustained rise. To continue to rise, AUD must break and hold above 0.6515. The chance of AUD breaking clearly above 0.6515 will increase in the next few days, provided that the ‘strong support’ level, currently at 0.6370, is not breached."