Australian Dollar: Upside risk tied to 0.7075 break against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD has pulled back to 0.7032 after failing to clear 0.7075, with intraday price action expected to remain range-bound between 0.7015 and 0.7055. Over 1–3 weeks, they still see upside risk, but stress that a sustained move above 0.7075 is needed to target 0.7100 and potentially a more durable recovery.

Range trade while watching key resistance

"24-HOUR VIEW: AUD rose as we expected two days ago. Yesterday, we highlighted that “upward momentum has picked up further, but not significantly, and the bias for today remains on the upside.” We also highlighted that “a break above 0.7075 is not ruled out, but it remains to be seen whether AUD can maintain a foothold above this level.” However, AUD did not break above 0.7075, pulling back from 0.7060 to 0.7023. Despite the pullback, there has been no clear increase in downward momentum, and instead of continuing to decline, AUD is more likely to range-trade today, probably between 0.7015 and 0.7055."

"1-3 WEEKS VIEW: We highlighted on Monday (03 Aug, spot at 0.7040) that “while the risk for AUD remains on the upside, any advance is expected to face firm resistance at 0.7075.” After AUD rose to a high of 0.7065 on Wednesday, we highlighted yesterday (06 Aug, spot at 0.7060) that “while upward momentum has not increased significantly, should AUD break and hold above 0.7075, the likelihood of it moving to 0.7100 will increase considerably.” We did not quite expect the subsequent sharp pullback to a low of 0.7023. From here, a break below 0.7015 (no change in ‘strong support’ level) would indicate that the risk of a break above 0.7075 has faded."

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