According to United Overseas Bank analysts Quek Ser Leang and Lee Sue Ann, the Australian Dollar (AUD) surged to 0.6992 against the US Dollar (USD) after an earlier dip, signaling strong short-term momentum and the potential for further gains. The analysts see scope for a test of 0.6995, with major resistance at 0.7015 being a critical level to watch. However, they note that it is unlikely for the AUD/USD pair to threaten the 0.7015 resistance in the immediate term, and maintaining momentum requires the AUD to stay above 0.6945, with minor support at 0.6960 [1].
On Monday, the AUD traded within a range of 0.6914 to 0.6970, closing at 0.6917, down 0.48%. Despite expectations for a slight downward move, the AUD dipped to a low of 0.6913 before rebounding sharply during the New York session to reach a high of 0.6992. This sharp rise was described as excessive, but analysts believe there is room for the AUD to test 0.6995 [1].
In the 1-3 week outlook, UOB's previous narrative highlighted that upward momentum had faded and expected the AUD to trade between 0.6890 and 0.6975. However, the recent surge above 0.6975 suggests that upward momentum is starting to rebuild. Despite this, it remains uncertain whether the AUD can break above the significant resistance at 0.7015. On the downside, a breach of the strong support level at 0.6930 would indicate that the momentum has faded again [1].
The medium-term bias for AUD/USD remains negative below 0.6835, indicating that while short-term momentum is positive, longer-term sentiment is still cautious [1].
CONCLUSION
The Australian Dollar has shown strong short-term momentum, surging toward key resistance levels and prompting analysts to consider further gains. However, uncertainty remains about whether the AUD can break above the major resistance at 0.7015, and medium-term sentiment is still negative below 0.6835. Market participants should watch for sustained moves above 0.6945 to confirm ongoing momentum.