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

United Overseas Bank (UOB) analysts, Quek Ser Leang and Lee Sue Ann, maintain that the Australian Dollar (AUD) remains strong, with its exchange rate currently hovering around 0.7200 against the US Dollar (USD). While the pair has experienced short-term consolidation between 0.7135 and 0.7170 since last week's significant rise, the broader uptrend is still considered intact.

The analysts point to 0.7200 as a major resistance level to monitor, with strong support at 0.7105 required to sustain bullish momentum in the coming weeks.

On Friday, AUD surged to a high of 0.7180, and yesterday, they noted that the sharp rise may have been overdone, but there were no signs of a pause yet. Today, AUD could potentially edge above 0.7180, while the significant resistance at 0.7200 is unlikely to emerge. Support is currently at 0.7150, and a breach of 0.7140 would suggest that upward pressure has eased.

However, instead of reaching 0.7180, AUD retreated from 0.7176 to 0.7141 before settling at 0.7150, marking a -0.27% price movement. The price fluctuations are likely part of a consolidation phase. For the next 1-3 weeks, UOB expects AUD to trade within the range of 0.7135/0.7170.

Last Thursday, the analysts highlighted that further AUD strength was not ruled out but required AUD to break clearly above 0.7150 before a move to 0.7175 could be expected. After AUD broke above 0.7150, they noted on Tuesday that AUD strength remains intact, with the critical level to watch being 0.7200. They reiterated the importance of holding above 0.7105, known as a 'strong support' level, to maintain momentum.