Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY
EUR/USD: Neutral: No signs of stabilization, expect extension to 1.0530.
EUR continues to grind lower and touched a ‘fresh low’ of 1.0590 yesterday. As highlighted yesterday, the current weakness appears to have scope to extend further towards 1.0530 with 1.0575 acting a strong intervening support. In order to maintain the short-term downward pressure, any rebound should not move back above 1.0660.
GBP/USD: Neutral: Still in a range, likely within 1.2350/1.2600. [No change in view] GBP continues to trade mostly sideways and the neutral phase that started more than a week ago is still intact. However, the lower volatility seen over the past few days suggests a narrower consolidation range of 1.2350/1.2600 instead of the 1.2350/1.2670 expected previously.
AUD/USD: Bullish: Diminished odds for further AUD strength*. [No change in view] While the strong daily and weekly closing last Friday is encouraging for our current bullish view, AUD has to break clearly above the major 0.7700 resistance soon or the risk of a short-term top would continue to increase. A clear break of 0.7700 could lead to a rapid rise towards 0.7735, 0.7780. The trailing stop-loss is adjusted higher to 0.7615 from 0.7595
NZD/USD: Neutral: Stabilization only if above 0.7220.
We indicated last Friday (10 Feb) that the short-term downward pressure should lead to extension lower to 0.7155/60. NZD touched a low of 0.7156 yesterday and with no signs of stabilization just yet, further weakness seems likely even though 0.7115/20 is another strong support and is unlikely to yield so easily. On the upside, only a move back above 0.7220 would indicate that the current negative undertone has stabilized.
USD/JPY: Neutral: Rebound to extend further to 114.50. [No change in view] We indicated last Friday that ‘the current rebound from the 111.55/60 low seen earlier this week appears to have ample momentum to extend further to 114.50’. The price action since then is in line with our expectation and a break above 114.50 would increase the prospect for a move towards the 115.35/40 high seen in late January. At this stage, the odds for a sustained break above 115.35/40 are not high. Overall, the current positive undertone for USD would ease only when 112.60 is taken out (113.20 is already a strong short term support).