Targets for: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY
EUR/USD: Neutral: Bullish if daily closing above 1.0840.
EUR hit a high of 1.0828 yesterday but eased off quickly. As highlighted in recent updates, despite the generally positive undertone, EUR has to close above 1.0840 to indicate the start of a bullish phase. This scenario is not ruled out just yet but the prospect for such a move has dimmed considerably. On the downside, a clear break below 1.0730 would indicate that the positive undertone has eased and this pair is then likely to trade sideways within a broad range.
GBP/USD: Neutral: In a 1.2400/1.2730 range.
GBP hit a high of 1.2706 yesterday, holding below the top end of the expected 1.2400/1.2730 consolidation range. While the failure to break above the strong 1.2730 level was not unexpected, the sharp plunge from the high came as a surprise. From here, we continue to expect sideway trading within the range mentioned above but the ‘bearish outside day’ yesterday suggests that the downside is more vulnerable (even though 1.2400 is expected to offer solid support).
AUD/USD: Shift from neutral to bullish: Anticipating a break above 0.7700.
We held the view that a daily closing above 0.7630 would indicate that a move towards 0.7700 has started. While AUD closed comfortably above 0.7630 (at 0.7660), the sharp surge to a high of 0.7696 suggests that further sustained up-move is likely in the coming days/weeks. From here, we are anticipating a break above 0.7700 and this would shift the focus towards last November’s top near 0.7775/80. On the downside, a move below 0.7560 would indicate that our bullish view is wrong even though on a shorter-term note, 0.7620/25 is already a strong support (those looking to turn long may consider buying near these levels).
NZD/USD: Bullish: Diminished odds for further NZD strength.
We highlighted yesterday that despite the robust recovery, upward momentum was lackluster and NZD has to punch above the recent peak at 0.7350 before the next leg higher can be expected. NZD hit a high of 0.7338 but eased off quickly. The rapid pull-back reinforces our current view that the odds for further NZD strength are not high. That said, the bullish outlook is deemed as intact until 0.7240 is taken out.
USD/JPY: Neutral: Bearish if daily closing below 112.50.
USD retested the 112.00/05 low seen earlier this week but rebounded strongly from the low to end the day at a much higher level (112.80). We continue to hold the view that only a daily closing below 112.50 would indicate that a move towards 111.30 has started. The odds for such a move have eased somewhat but as long as 113.95 is not taken out, it cannot be ruled out just yet.