Australian Dollar: Upside risk targets 0.7150 against US Dollar – UOB

UOB's analysts Quek Ser Leang and Lee Sue Ann have indicated that the Australian Dollar (AUD) is currently strong and shows potential for further upside, with a target of 0.7150 against the US Dollar (USD). Although the AUD reached a high of 0.7129 earlier, overbought conditions have limited any significant intraday moves to a range between 0.7090 and 0.7130. In the short-term, the 1-3 week outlook remains positive, with the next key level to watch being 0.7150. Strong support for the AUD is currently identified at 0.7070.

AUD had surged to 0.7095 the previous day, and when it was at 0.7080, analysts predicted that the 0.7100 level might be just out of reach due to overbought conditions. However, the AUD managed to break past expectations, reaching a high of 0.7129 before closing at 0.7104, representing a gain of 0.32%. Despite this modest retreat, the AUD strength appears to still be intact. Yet, analysts caution that any further gains are likely to be contained within the 0.7090/0.7130 range due to overbought conditions.

The analysts maintain their belief that the risk for AUD is on the upside since early this month. On August 17, they reiterated their view, pointing out that AUD needs to surpass 0.7100 before a move to 0.7120 can be anticipated. While they did not expect the AUD to rapidly break above both 0.7100 and 0.7120, any movement above these levels would indicate continued upside potential. Ultimately, a breach of the strong support level at 0.7070 would signal that the upside risk for AUD has diminished.