UBS Sees Limited Downside for AUD/USD, Targets EUR/USD at 1.07 for Q2
The Australian dollar (AUD) is expected to remain resilient against the U.S. dollar (USD), with its downside limited to the 0.60-0.62 range in the near term, according to UBS FX strategists.Following the Reserve Bank of Australia’s (RBA) decision to maintain the cash rate at 4.1%, the AUD/USD pair saw a slight uptick. The RBA’s decision, in line with market expectations, reflects easing inflation pressures. However, RBA Governor Michele Bullock highlighted ongoing tightness in the labor market, emphasizing that inflation remains the central focus, distancing the RBA's stance from that of the U.S. Federal Reserve.
Despite a temporary increase in the AUD, the currency remains under pressure, lagging behind other G10 currencies. UBS analysts noted that the recent decision does not signal a dovish shift, but rather a cautious acknowledgment of global economic risks. With significant net-short positions and a slowdown in superannuation fund outflows, the strategists see limited downside for the AUD/USD pair and have upgraded the currency from “Neutral” to “Attractive.”
UBS Sets EUR/USD Q2 Target at 1.07
UBS has released its latest analysis of the currency market, offering insights into the Euro versus the US Dollar (EUR/USD). The investment bank remains cautious on EUR/USD, predicting a potential decline toward its second-quarter target of 1.07.
Additionally, UBS suggests that the current levels of the US dollar against the Japanese yen (USD/JPY) present an attractive opportunity for investors looking to increase their yen positions. The bank's short-term model indicates a fair value for USD/JPY closer to 145.
This analysis reflects UBS's strategic outlook for the coming quarter, highlighting a cautious stance on EUR/USD and identifying potential opportunities in the yen.
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