AUD/USD: Upside momentum loses traction – UOB

UOB Group’s FX Strategists noted the recent upside bias in AUD/USD could be running out of steam.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further AUD strength would not be surprising but the chance of AUD breaking the major resistance at 0.7305 is not high’. However, AUD did not strengthen further as it eased off from 0.7280 before closing on a soft note at 0.7238 (-0.52%). Downward momentum is beginning to build and the bias has shifted to the downside. That said, any weakness is expected to encounter strong support at 0.7200. Resistance is at 0.7255 followed by 0.7270.”

Next 1-3 weeks: “On Wednesday (25 Aug, spot at 0.7255), we highlighted that the rebound in AUD ‘could extend to the major resistance at 0.7305’. We added, ‘AUD has to close above this major resistance before a sustained advance can be expected’. AUD subsequently rose to 0.7280 before easing off. Upward momentum is beginning to wane and a break of 0.7200 (no change in ‘strong support’ level) would indicate that the chance for AUD to close above 0.7305 has dissipated.”