Australian Dollar: Bulls challenge 0.7200 against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight AUD/USD’s third consecutive daily gain, with the pair stalling just under the 0.7200 resistance. While momentum is showing negative divergence, they still see scope for a brief push above 0.7200, though not sustained or extending to 0.7220. On a one-to-three-week view, they see potential for a test of 0.7220 before pullback risks increase.

Uptrend slows but upside targets still in play

"24-HOUR VIEW: AUD edged up to within a couple of pips of the major resistance at 0.7200 yesterday, printing a high of 0.7198. AUD closed higher for the third straight day at 0.7194 (+0.31%). Despite posting fresh three-month highs, upward momentum is deteriorating, with momentum indicators showing negative divergence. That said, there is scope for AUD to rise above 0.7200. However, AUD is unlikely to maintain a foothold above this level. Any further advance is also unlikely to reach 0.7220. Support is at 0.7185; a breach of 0.7175 would indicate that the immediate upward pressure has eased."

"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.” While AUD rose to a high of 0.7198 yesterday, upward momentum is deteriorating amid negative divergence on momentum indicators. However, as long as AUD holds above 0.7160 (‘strong support’ level previously at 0.7120), there is a chance for AUD to test 0.7220 before the risk of a pullback increases."