EUR/USD: Neutral (since 21 Aug 18, 1.1485): Immediate bias is for EUR to probe the top of the expected 1.1330/1.1490 consolidation range.
There is not much to add to last Friday’s (02 Nov, spot at 1.1400) update wherein last Tuesday’s (31 Oct) low of 1.1299 is deemed as a short-term bottom and this level is expected to hold for a couple of weeks. On a short-term basis, the immediate bias is for EUR to ‘probe’ the top of the expected 1.1330/1.1490 consolidation range. At this stage, the prospect for a break above the range is not high but the odds would continue to improve if EUR can continue to hold above 1.1370 in the coming days. Looking ahead, a break above 1.1490 would suggest the 1.1299 low could turn out to be a significant bottom.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Rebound could extend further but a break of 1.3190 would be surprising.
We highlighted on Monday (05 Nov, spot at 1.3000), the “rebound in GBP has room to extend higher to 1.3100”. While the expectation was right as GBP touched a high of 1.3111 during NY hours, the pace of the advance has been more rapid than expected. From here, the rebound could extend further but at this stage, a break of the major 1.3190 resistance would come as a surprise. On the downside, only a move back below the ‘key support’ at 1.2950 (level previously at 1.2840) would indicate that a short-term top is in place.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Scope for AUD to test the key and critical 0.7260 resistance.
We indicated last Friday (02 Nov, spot at 0.7205) there is “scope for AUD to test the key and critical 0.7260 resistance”. AUD took a ‘sniff’ at this level but retreated quickly from a high of 0.7258. As highlighted, this 8-1/2 month declining trend-line is a ‘key and critical’ resistance and a break of this level would suggest that the 0.7021 low seen on 26 Oct is a significant mid to long-term bottom. Despite failing to break above 0.7260 on Friday and the subsequent rapid pull-back from the high, another attempt to break this level is not ruled out. Only a move back below 0.7110 (no change in ‘key support’ level from last Friday) would indicate that a short-term top is in place. Looking ahead, a break of 0.7260 would indicate that AUD is ready to move above the September’s peak of 0.7315.
NZD/USD: Neutral (since 20 Aug 18, 0.6625): Further NZD strength is not ruled out but 0.6850 is likely out of reach.
We have held the same view since last Friday (02 Nov, spot at 0.6645) wherein there is “scope for NZD to test the September’s peak of 0.6700”. However, instead of ‘testing’ this major resistance, the better than expected NZ jobs data sent NZD rocketing to an overnight high of 0.6742. Despite the strong up-move, we still think that it is too soon to expect the start of a bullish reversal. Only a clear break above 0.6850 would indicate that NZD has made a mid to long-term bottom. Meanwhile, further NZD strength is not ruled out but 0.6850 is likely out of reach, at least for the next 1 to 2 weeks (0.6780 is already a strong level). On the downside, the ‘key support’ is currently at 0.6640, up from 0.6565 previously.
USD/JPY: Neutral (since 09 Oct 18, 113.10): NY close above 113.50 would suggest USD is ready to challenge 114.00.
USD tested the top of our expected 112.00/113.50 consolidation range as it touched an overnight high of 113.49. As highlighted last Friday, a NY closing above 113.50 would suggest USD is ready to challenge 114.00. This scenario would not be surprising unless USD were to move back below 112.80 within these 1 to 2 days.