EUR/USD: Neutral (since 05 Mar 18, 1.2335): EUR is expected to move lower and test the strong 1.2200 support.
The ease of which EUR took out the strong 1.2270 support was not exactly expected. As highlighted last Friday (16 Mar, spot at 1.2305), a break of this level would indicate that the immediate pressure has shifted to the downside. While we are not ready to adopt a fullfledged bearish stance just yet, we expect EUR to move lower from here and test the next strong support at 1.2200. Only a move back above 1.2385 would indicate that the current downward pressure has eased. On a shorter-term note, 1.2345 is already a strong resistance.
GBP/USD: Neutral (since 07 Mar 18, 1.3895): Upward pressure has eased, GBP is back in consolidation phase.
GBP dipped below the strong 1.3895 support and as highlighted last Friday (16 Mar), a breach of this level would indicate that the mild upward pressure has eased and that GBP has moved into a consolidation phase. In other words, we continue to hold a neutral outlook but we expect GBP to trade sideways from here, likely within a 1.3840/1.4000 range.
AUD/USD: Neutral (since 15 Feb 18, 0.7925): Clear break of 0.7715/20 would indicate the start of a bearish phase.
The solid support zone highlighted at 0.7715/25 is being tested sooner than expected and a clear break of this level would indicate that the month-long neutral phase has ended and a move towards 0.7630 has started. This appears to be a likely scenario unless AUD can move and stay above 0.7770 within these few days.
NZD/USD: Neutral (since 05 Feb 18, 0.7280): Scope for a probe of the major 0.7175/85 support zone.
There is not much to add to last Friday’s update (16 Mar, spot at 0.7275) wherein we hold the view that there is scope for NZD to probe the major 0.7175/85 support zone. That said, the continuing sharp and rapid decline was unexpected as NZD lost about -1.6% over last Thursday and Friday, the largest 2-day decline since early February. While the 0.7175/85 support zone is expected to offer solid support, a break of this zone is not ruled out and would indicate that NZD has moved into a bearish phase. The odds for such a move are not that high at this stage but would increase quickly unless NZD can reclaim 0.7300 (0.7265 is already quite a strong resistance level).
USD/JPY: Neutral (since 21 Feb 18, 107.35): A retest of 105.25 seems likely.
USD dipped below our expected 105.70/107.50 consolidation last Friday and hit a low of 105.59. While the decline lacks momentum, the undertone has weakened and from here, a retest of the month-to-date low of 105.25 seems likely. At this stage, the prospect for a clear break of this level is not high. Overall, only a move back above 106.80 would indicate that the current mild downward pressure has eased.