EUR/USD: Neutral: Increasing upside risk.
As indicated yesterday, a move to 1.1280 would not be surprising (overnight high has been 1.1303). From here, this month and last month peak at 1.1342 and 1.1375 respectively are acting as very strong resistances and at this stage, it is unclear whether EUR has enough momentum to break above these two major levels convincingly.
However, as long as EUR continues to hold above 1.1175/80, the upside pressure will continue to increase in the coming days.
GBP/USD: Neutral: Likely in a broad 1.4050/1.4400 range.
Despite the strong rally yesterday, we are not convinced that the current up-move in GBP is the start of a sustained rally. We have been neutral since last Wednesday and expected this pair to trade in a broad 1.4050/1.4400 range. In the space of one week, GBP has touched a low of 1.4056 before rallying strongly to reach 1.4403 during NY session yesterday.
In other words, the recent movement is within our expectation. All that said, we cannot ignore the strong shortterm upward momentum and we would have to reevaluate our view upon a sustained move above 1.4400 (bearing in mind the month’s high is not that far away at 1.4514). Overall, this pair is expected to remain underpinned in the coming days as long as 1.4200 is not taken out.
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AUD/USD: Neutral: In a broad 0.7450/0.7650 range.
Despite the strong overnight rally, there is no change to our current neutral view on AUD. However, a move above the top end of our expected 0.7450/0.7650 range would not be surprising but at this stage, the current rally does not appear to have enough impetus to move significantly above the month’s high at 0.7680.
That said, shorter-term indicators are constructive and this pair is expected to remain supported in the coming days. Support is at 0.7560 but the key level is at 0.7510.
NZD/USD: Neutral: Bullish only above 0.6900.
NZD rallied strongly overnight and short-term indicators clearly suggest further upward pressure in the coming days. However, the current price action appears to be similar to those during the middle of this month where a strong 2-day rally fizzled out quickly.
In other words, we are maintaining our neutral view for NZD but a clear break above the major and crucial 0.6900 resistance would be a strong indication that NZD would head much higher in the coming weeks. In the meanwhile, this pair is expected to remain underpinned with strong support at 0.6760.
USD/JPY: Neutral: In a broad 111.50/113.50 range now.
The expected corrective rebound has likely topped out at 113.80 yesterday (falling short of our target at 114.00).
However, the outlook for USD is still viewed as neutral and we expect this pair to trade in a broad 111.50/113.50 range from here.