Australian Dollar: Strength intact with 0.7200 in focus against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD has slipped into short-term consolidation between 0.7135 and 0.7170 after last week’s sharp rise, but they still regard the broader uptrend as intact. They highlight 0.7200 as a major resistance level to watch, with strong support at 0.7105 needing to hold to sustain the bullish momentum over the coming weeks.

Consolidation within broader uptrend

"24-HOUR VIEW: AUD soared to a high of 0.7180 last Friday. Yesterday, when it was at 0.7165, we highlighted the following: “The sharp rise appears overdone, but there are no signs of a pause just yet. Today, AUD could edge above 0.7180. The significant resistance at 0.7200 is unlikely to come into view. Support is at 0.7150; a breach of 0.7140 would indicate that the immediate upward pressure has eased.” However, instead of edging above 0.7180, AUD eased from 0.7176 to 0.7141 before settling at 0.7150 (-0.27%). The price movements are likely part of a consolidation phase. Today, we expect AUD to trade in a range of 0.7135/0.7170."

"1-3 WEEKS VIEW: Last Thursday (19 Aug, spot at 0.7125), we highlighted that “while further AUD strength is not ruled out, it must first break clearly above 0.7150 before a move to 0.7175 can be expected.” After AUD broke clearly above 0.7150, we highlighted yesterday (24 Aug, spot at 0.7165) that “AUD strength remains intact, and the level to watch is 0.7200.” We added, “to keep the momentum going, AUD must hold above 0.7105 (‘strong support’ level).” There is no change in our view."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)