AUD: Strength Against USD Persists, 0.7200 in Focus – UOB

AUD/USD is currently trading near 0.71536 after last week's sharp gains, entering a short-term consolidation phase. UOB Group's FX strategists Quek Ser Leang and Lee Sue Ann note that the pair has retreated from its highs and is now within a 0.7135 to 0.7170 consolidation range. Despite this, they maintain a bullish view, stating that the broader uptrend remains intact, with the next focus on the 0.7200 level.

**Short-Term Consolidation Does Not Alter Bullish Stance**

The analysts indicate that while upside momentum has slowed, leading to intraday range-bound trading, this is a normal pause after a significant rally. As long as key support levels hold, the current consolidation can be seen as bulls building strength for further upside. Market signals suggest that as long as AUD/USD holds short-term support near 0.7135, the possibility of testing the 0.7200 level remains.

**External Factors Provide Potential Support**

AUD's recent strength is partly supported by a favorable external environment. Market analysis points out that persistent inflationary pressures in Australia have delayed market expectations for RBA rate cuts, providing yield differential support for the AUD to some extent. Additionally, if global risk sentiment remains stable, the AUD, as a commodity currency, could continue to receive a boost.

**Key Resistance Level in Focus Ahead**

Looking ahead, 0.7200 has become the primary short-term target for bulls. A decisive break above this round figure could open broader upside space for AUD/USD. Conversely, losing the lower bound of the current consolidation range would warrant caution over a deeper pullback. Investors are closely monitoring upcoming economic data and the overall direction of the US dollar to gauge whether this breakout attempt will succeed.