AUD/USD could visit the 0.7200 region – UOB

AUD/USD remains firm and faces a potential move to the 0.7200 region in the near-term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we expected AUD to move higher yesterday, the sudden surge in momentum that sent it rocketing to a high of 0.7147 came as a surprise (we were of the view the major resistance at 0.7067 is unlikely to come under threat). While the supersized and sped up rally could extend above the overnight high of 0.7147, severely overbought conditions suggest any advance may not be able to reach 0.7200 (there is another resistance at 0.7170). Support is at 0.7100 followed by 0.7070.”

Next 1-3 weeks: “We detected the pick-up in upward momentum relatively early as we highlighted last Wednesday (15 Jul, spot at 0.6985) that ‘if AUD closes above 0.7010, it could move to the June’s peak of 0.7067’. AUD subsequently traded sideways and the lack of improvement in momentum prompted us to indicate on Monday (20 Jul, spot at 0.7000) that AUD ‘could inch higher but 0.7067 is likely out of reach’. However, AUD did anything but inch as it lifted off and surged to a high of 0.7147 yesterday (21 Jul) before closing higher by +1.58% (0.7128), its biggest 1-day gain since early June. Upward momentum received a strong boost and from here, the next level to focus on is at 0.7200. Looking ahead, the next resistance is at 0.7250. The current positive phase in AUD is deemed as intact unless AUD moves below 0.7030 (‘strong support’ level was at 0.6930 yesterday).”