Australian Dollar: Watching 0.7200 resistance against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD extended its consolidation slightly higher, closing at 0.7165 as short-term momentum improves. They see scope for further gains within a tight intraday band and continue to highlight 0.7200 as a major resistance level for the coming weeks, with the bullish view contingent on the pair holding above a nearby strong support zone.

Short-term consolidation with upside bias

"24-HOUR VIEW: When AUD was at 0.7155 in the early Asian session yesterday, we highlighted that “the current price movements in AUD are likely part of a 0.7135/0.7170 consolidation phase. AUD subsequently traded between 0.7137 and 0.7168 before closing 0.21% higher at 0.7165. The tentative increase in upward momentum suggests AUD could edge higher today. However, any advance is likely to stay within a 0.7145/0.7180 range. Even if AUD breaks above 0.7180, any further advance is unlikely to reach 0.7200."

"1-3 WEEKS VIEW: Last Thursday (19 Aug, spot at 0.7125), we highlighted that “while further AUD strength is not ruled out, it must first break clearly above 0.7150 before a move to 0.7175 can be expected.” After AUD broke clearly above 0.7150, we highlighted on Monday (24 Aug, spot at 0.7165) that “AUD strength remains intact, and the level to watch is 0.7200.” We will continue to hold the same view as long as 0.7120 (‘strong support’ level previously at 0.7105) is not breached."