EUR/USD: Bearish: Modest target of 1.0710.
The recovery yesterday was unexpected as EUR/USD touched an overnight high of 1.0856. The up-move appears to have scope to test the 1.0875/80 resistance but a sustained move above this level appears unlikely. On the downside, only a move back below 1.0810 would indicate that the short-term upward pressure has eased.
As pointed out yesterday, while we shifted to a bearish stance in EUR/USD, the downward momentum is not impulsive and we have a modest target of 1.0710.
GBP/USD: Neutral: In a corrective recovery now targeting 1.4450.
In line with expectations, the initial bounce in GBP/USD held below 1.4345 (high of 1.4310) before dropping to exceed the 1.4230 target with a low of 1.4224.
The recent short-term upward pressure has clearly eased and the current movement is viewed as part of a consolidation phase which appears to have scope to extend higher to 1.4450 (a break above this level is not expected). Strong support is at 1.4150 and the recent low of 1.4080 is acting as a very strong support now.
AUD/USD: Neutral: Rebound has room to extend to 0.7110.
No change in view. The outlook for AUD shifted to neutral last Friday and there is no change to the view. The current movement is likely part of a corrective rebound which could extend higher to test the 0.7110 resistance.
Strong support is at 0.6875 and the recent low of 0.6820 is unlikely to come under threat in the coming week.
NZD/USD: Neutral. Not out of the woods yet. Retracement Target at 0.6610.
While the bearish phase in NZD that started in early January has likely ended, the strong up-move from the low of 0.6348 is viewed as a corrective rebound and not the start of a bullish reversal. The ideal “retracement target” is at 0.6610 but the quick and rapid drop from the recent high of 0.6558 does not bode well for NZD. Furthermore, daily MACD is still in negative territory and this suggests that NZD is not out of the woods yet.
From here, a clear break below 0.6410 will greatly increase the odds for NZD breaking below 0.6348 for a move towards the major support near 0.6300. Overall, this pair has to reclaim 0.6555/60 in the next few days or the downside risk will continue to increase.
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