AUD/USD: A move to 0.72 runs out of steam – UOB

Bets for a move to 0.72 in AUD/USD appears to be diminishing, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we expected AUD ‘to continue to edge higher’. We highlighted ‘the major resistance at 0.7200 is unlikely to come under threat’ and added, ‘0.7185 is already quite a strong resistance level’. AUD subsequently rose to a high of 0.7177 before easing off. While it is too early to expect a short-term top, upward momentum has deteriorated considerably and any advance in AUD from here is likely to be slow and grinding and the major resistance at 0.7200 is still not likely to come into the picture. Overall, AUD is more likely to trade at a slightly higher range of 0.7120/0.7185.”

Next 1-3 weeks: “Our latest narrative was from last Wednesday (22 Jul, spot at 0.7135) wherein ‘upward momentum in AUD received a strong boost and the next level to focus on is at 0.7200’. AUD subsequently popped to a high of 0.7184 but the lack of a follow-through thereafter came as a surprise. For now, we continue to see chance, albeit a diminished one for AUD to move to 0.7200. Only a breach of 0.7030 (no change in ‘strong support’ level) would indicate the current upward pressure has dissipated.”