Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY
EUR/USD: Neutral: Around a 1.0490/1.0590 range.
We indicated yesterday that ‘unless EUR can move and stay above 1.0610 by end of today, it is more likely that this pair has moved into a consolidation phase’. EUR closed at 1.0540 and from here we expect this pair to trade sideways around a 1.0490/1.0590 range. EUR has been trading within a relatively narrow 1.0490/1.0680 range for about 3 weeks now and such prolonged consolidation could lead to a sharp ‘break-out’. At this stage, the downside appears to be more vulnerable and a clean and clear break below 1.0490 could lead to a rapid drop to 1.0450, 1.0400.
GBP/USD: Bearish: GBP to grind lower to 1.2100.
We were of the view that GBP would grind lower towards 1.2150 followed by 1.2100. The overnight low has been 1.2139 and while there are some early and tentative signs that GBP is trying to form a base, only a move back above the trailing stop-loss at 1.2250 (adjusted from 1.2310) would indicate that a shortterm low is in place. Until then, GBP is expected to grind lower towards the next support at 1.2100.
AUD/USD: Neutral: Clear break below 0.7510 could lead rapid drop to 0.7430.
While we expected AUD to extend its weakness towards 0.7510 since last Friday (see annotation in chart below), the sudden acceleration lower yesterday came as a surprise. The pace and the extent of the decline suggest that a move below 0.7510 cannot be ruled out. From here, unless AUD can move and stay above 0.7570 within these 1 to 2 days, a clear break below 0.7510 could lead to a rapid drop towards the next support at 0.7430.
NZD/USD: Neutral: Severely overextended but no signs of stabilization just yet.
NZD continues to decline and from here, the focus is at 0.6890 followed by the major long-term support at 0.6863 (low in December 2016). Stabilization is only upon a move above 0.6960.
USD/JPY: Neutral: Rebound has room to extend to 114.95.
After faltering for several days, USD came back to life and closed on a very strong note. We continue to expect the current rebound (from last week 111.67 low) to extend higher towards the formidable 114.95 resistance. At this stage, the odds for a sustained move above this level are not high but a clear break could lead to acceleration higher towards 115.40, 115.60. For the above the scenario to pan out, any pull-back should not move below the key support at 113.85