UOB discusses AUD/USD technical outlook and flags a scope for a rally extension towards 0.7550 over the coming weeks.
"After more than two months, AUD/USD popped above 0.7300 last Friday (28 Aug 20). AUD/USD subsequently closed at 0.7367 for an impressive weekly gain of 2.89%. Such strong weekly gains are not exactly common and looking back to mid-March, there were only three other instances when AUD/USD posted such large advances.
What is of note is that after a strong weekly advance, the low of the weekly bar did not come back into the picture as AUD/USD either advanced further or traded sideways before moving higher later on. If the “set-up” were to repeat, it means that last week’s low at 0.7150 may not come back picture for the next several weeks, if not months," UOB notes.
"All in, the current technical readings suggest AUD/USD could continue to strengthen despite the rather overbought conditions. The next resistance level of note is at 0.7550 followed by 0.7640. As indicated above, 0.7150 is a solid support but looking beyond the next couple of months, the current long-term positive outlook is deemed as intact as long the 55-week exponential moving average is not breached (level is currently at 0.6860)," UOB adds.