Australian Dollar: Rebound against US Dollar tests resistance – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD is likely to trade between 0.7120 and 0.7175 in the near term after a sharp rebound left momentum unclear. Over 1–3 weeks, downward momentum is said to be slowing rapidly, with a break above 0.7180 signalling that recent weakness has stabilised. The broader 1–3 month view still points to a lower AUD/USD toward 0.6765 if 0.6850/0.6870 breaks.

Australian Dollar weakness shows signs of stabilising

"24-HOUR VIEW: AUD rebounded strongly to a high of 0.7175 two days ago. Yesterday, we highlighted that “the sharp bounce appears excessive,” and we were of the view that “instead of continuing to rise, AUD is more likely to trade between 0.7115 and 0.7175.” AUD then swung between 0.7100 and 0.7168 before closing little changed at 0.7149 (-0.06%). We are not able to derive much from the price action. Today, AUD could trade between 0.7120 and 0.7175."

"1-3 WEEKS VIEW: We have held a negative AUD stance for more than a week. Following the strong rebound in AUD on Wednesday, we highlighted yesterday (21 May, spot at 0.7150) that “downward momentum is slowing rapidly, and a breach of 0.7180 (‘strong resistance’ level) would indicate that the weakness in AUD has stabilised.” We continue to hold the same view."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)