Australian Dollar: Upward momentum capped by 0.7075 against US Dollar – UOB

UOB analysts Quek Ser Leang and Lee Sue Ann observed that the Australian Dollar (AUD) rebounded strongly, closing at 0.7047 against the US Dollar, after initially retreating. Intraday, there is potential for further gains, but resistance levels at 0.7060/0.7075 are anticipated. Support above 0.7020 is crucial to maintain momentum. Over the next one to three weeks, the upside risk remains, but advances may encounter strong resistance at 0.7075.

Yesterday, AUD retreated to a low of 0.6984, but contrary to expectations, it did not continue to decline. Instead, AUD traded within a range of 0.6980-0.7030, ultimately ending the day at 0.7049. The strong upward momentum suggests that AUD could continue its rise. However, any further increase may struggle to surpass the major resistance level at 0.7075, with another resistance point at 0.7060. To sustain this momentum, AUD must stay above 0.7020, with minor support at 0.7030.

Looking ahead over the next one to three weeks, UOB maintains its view that while AUD's upside potential exists, any advance will likely face resistance at 0.7075. As long as the strong support level at 0.6990 holds, this outlook will remain unchanged.