Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY
EUR/USD: Neutral: Immediate downward pressure, room to extend to 1.0450/55.
While EUR weakened as expected, we highlighted yesterday that ‘any decline is expected to struggle to move below last week’s low at 1.0520’. The overnight low has been 1.0524 and the weak daily closing suggests that the immediate pressure is still on the downside. A move below 1.0520 could lead to further weakness towards the mid-Jan low of 1.0450/55 but based on the current patchy momentum, any decline is expected to be ‘slow and grinding’. Overall, only a move back above 1.0620 would indicate that the immediate downward pressure has eased.
GBP/USD: Neutral: Back in range; likely within 1.2400/1.2580.
GBP tested the minor support at 1.2405 yesterday but rebounded strongly after hitting a low of 1.2402. The recent negative undertone has eased with the sharp bounce and this pair has likely moved into a 1.2400/1.2580 consolidation range. In other words, the overall neutral phase that started earlier this month is still intact.
AUD/USD: Bullish: To take half profit at 0.7775/80.
The trailing stop-loss for our bullish view at 0.7640 is still intact as AUD rebounded from a low of 0.7650. The recovery is lacking in momentum and as indicated yesterday, while another push higher toward 0.7775/80 (for profit-taking) is not ruled out just yet, the odds for such a move would continue to diminish unless AUD can move and stay above 0.7710.
NZD/USD: Neutral: Still neutral but likely in a lower 0.7100/0.7260 range.
In line with expectation, NZD ‘challenged’ last week’s 0.7135 low but rebounded quickly after touching 0.7130. The undertone is mildly negative and a move below 0.7130 would not be surprising but based on the current patchy momentum, any decline is viewed as part of a broader consolidation phase and is unlikely to be sustained. In other words, the outlook for NZD is still viewed as neutral even though this pair is likely to trade in a lower 0.7100/0.7260 consolidation range (instead of the 0.7150/0.7320 expected previously).
USD/JPY: Neutral: In a 112.30/114.50 range. [No change in view]
After closing lower for 3 straight days, USD ended higher yesterday and registered a modest gain. From here, the price action is still viewed as part of a 112.30/114.50 consolidation range and based on the current indicators, this range is expected to be intact for a while yet.