In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further upside momentum in AUD/USD opens the door to a probable visit of the 0.7200 zone.

Key Quotes

24-hour view: “Last Friday, AUD soared to a high of 0.7168 before closing on a strong note at 0.7160 (+0.85). Further AUD strength would not be surprising but in view of the overbought conditions, AUD may not be able to maintain a foothold above 0.7180 (next resistance is at 0.7200). Support is at 0.7140 but only a break of 0.7120 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “We highlighted last Monday (23 May, spot at 0.7070) that upward momentum is beginning to build and the risk is tilted to the upside towards 0.7135. We added, ‘AUD has to close above the major resistance at 0.7135 before a sustained advance is likely’. After trading sideways for several days, AUD rose above 0.7168 last Friday before closing at 0.7160. Upward momentum has improved and AUD could advance to 0.7200. Overall, only a breach of 0.7090 (‘strong support’ level previously at 0.7025) would indicate that upward momentum has eased.”