UOB analysts Quek Ser Leang and Lee Sue Ann report that the Australian Dollar (AUD) experienced heightened volatility, spiking to 0.7181 before sliding to 0.7139 against the US Dollar (USD) [1]. The analysts note that intraday momentum is now skewed lower, but they consider it insufficient for the AUD/USD pair to reach the major support level at 0.7120 in the immediate term [1]. Over the past month, the AUD had shown strength, but UOB believes this trend has ended, and they expect a further pullback toward 0.7120 unless the resistance at 0.7190 is breached [1].
During the 24-hour period, the AUD declined to a low of 0.7152 on Monday before rebounding to a high of 0.7171. The analysts had anticipated a range-bound movement between 0.7155 and 0.7180, but actual volatility exceeded their expectations, with the pair rising to 0.7181 and then dropping sharply to 0.7139 [1]. They observe that while downward momentum is increasing, it is not significant enough to expect a break below 0.7120 in the near term. Resistance is identified at 0.7160, and a breach of 0.7170 would indicate that the current downward pressure has eased [1].
Looking ahead, UOB maintains its view that the AUD could pull back further toward 0.7120 over the next one to three weeks, with the next support level at 0.7105 if 0.7120 is breached [1]. However, if the pair breaks above the 0.7190 resistance, it would suggest a shift to range trading rather than continued downside [1]. In the longer term, the analysts still see scope for a move above 0.7200 toward 0.7280 [1].
CONCLUSION
UOB analysts expect the Australian Dollar to pull back toward 0.7120 against the US Dollar, following a period of increased volatility and the end of a month-long uptrend. While short-term momentum is skewed lower, a significant break below 0.7120 is not anticipated unless current support levels are breached. A move above 0.7190 would indicate a shift to range trading rather than further downside.