Australian Dollar: Short-term pullback within broader uptrend against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann observe that AUD/USD has corrected from 0.7208 but is now rebounding, with intraday trade expected between 0.7155 and 0.7180. They believe the month-long Australian Dollar (AUD) strength has ended, opening scope for a deeper pullback toward 0.7120. However, the medium-term technical picture still favors a break above 0.7200 toward the year-to-date high near 0.7280.

Aussie Dollar consolidates before next leg

"24-HOUR VIEW: Last Friday, AUD rose to 0.7208 before pulling back sharply to close at 0.7158 (-0.50%). Yesterday, when AUD was at 0.7160, we were of the view that AUD “could continue to pull back toward 0.7145.” We added, “based on the prevailing momentum, a clear break below this level appears unlikely.” AUD declined less than expected to 0.7152 before rebounding to a high of 0.7171. While the increase in momentum suggests AUD could rebound further, it should stay within a 0.7155/0.7180 range."

"1-3 WEEKS VIEW: The following excerpts from our update yesterday (31 Aug, spot at 0.7160) remain valid. “The price action suggests that the almost month-long AUD strength has ended. Given the overbought conditions and negative divergence, AUD could pull back further toward 0.7120. It is unclear for now whether AUD could break clearly below this level. On the upside, a breach of the ‘strong resistance’ level, now at 0.7200, would mean that AUD is more likely to range-trade rather than continuing to pull back.” "