Targets for EUR/USD, GBP/USD, AUD/USD, NZD/USD and USD/JPY
EUR/USD: Neutral: Bullish if daily closing above 1.0840.
As noted yesterday, unless there is a clear move back below 1.0730 within these few days, the undertone for EUR is viewed as positive (overnight low has been 1.0729). However, only a daily closing above 1.0840 would indicate that this pair has entered a bullish phase (with an immediate target of 1.0955).
GBP/USD: Neutral: In a 1.2400/1.2730 range.
We turned neutral GBP yesterday after the stop-loss for our bullish view at 1.2420 was taken out (low of 1.2412). The subsequent strong surge from the low came as a surprise and from here, a clear break above the top end of the expected 1.2400/1.2730 consolidation range would indicate that GBP has re-entered a bullish phase. Overall, this pair is expected to stay underpinned with solid support at 1.2545 (minor level at 1.2615). A clear break above 1.2730 would greatly increase the odds for a move above last December’s top at 1.2775.
AUD/USD: Neutral: Bullish if daily closing above 0.7630.
The recent consolidation phase is expected to be resolved with an upside break but only a clear break above the major 0.7630 resistance would indicate that AUD has re-entered a bullish phase. The high has been 0.7631 as of the time of writing and from here, a daily closing above 0.7630 would indicate that a move towards 0.7700 (weekly trend-line resistance) has started. The next resistance above 0.7710 is at last November’s top near 0.7775/80. The odds for a break higher appear to be quite high as long as any short-term pull-back does not move back below 0.7560. A break back below this level would indicate that AUD is still caught in a consolidation phase.
NZD/USD: Bullish: Diminished odds for further NZD strength.
NZD rebounded quickly from a low of 0.7240/45 yesterday. Despite the rather robust recovery, upward momentum is lackluster at best and this pair has to punch above the recent peak of 0.7350 before the next leg higher can be expected. A break back below 0.7240/45 would be an early indication that a short-term top is in place.
USD/JPY: Neutral: Bearish if daily closing below 112.50. [No change in view]
While we highlighted the vulnerability of USD yesterday and held the view that the immediate pressure is on the downside towards 112.50, the sharp and rapid drop to a low of 112.04 came as a surprise. The immediate pressure is still clearly on the downside but at this stage, it is unclear if the current weakness could be sustained (especially with the strong bounce from the low). Only a daily closing below 112.50 would indicate that a move towards 111.30 has started. The odds for such a move appear to be quite high unless USD can reclaim 113.95 within these 1 to 2 days.