EUR/USD: Neutral (since 05 Jun 18, 1.1700): EUR is expected to trade sideways.
There is not much to add as EUR touched a high of 1.1745 yesterday before easing off. As highlighted yesterday, the recent mild downward pressure has eased and EUR is expected to trade sideways for now, likely within a broad 1.1620/1.1790 range. From a longer-term perspective, EUR has been trading in a relatively quiet manner within a 1.1507/1.1790 range since mid-June and with most indicators at ‘neutral’ level, it appears unlikely that EUR is ready to embark of a sustained directional move anytime soon.
GBP/USD: Neutral (since 25 Jun, spot at 1.3265): GBP is expected to trade sideways.
GBP traded sideways yesterday and closed largely unchanged (NY close of 1.3126, -0.05%). Indicators remain ‘flat’ and we continue to hold a neutral stance and expect GBP to trade sideways from here, likely within a 1.3010/1.3220 range.
AUD/USD: Neutral (since 05 Jul 18, 0.7380): AUD is likely caught in a broad range for now. No change in view.
AUD traded within a tight 27 pips range yesterday, the narrowest 1-day range so far this year. The quiet consolidation offers no fresh clue and we continue to hold a neutral stance. We previously held the view that the downside is more ‘sticky’ but the recent consolidation within narrow ranges suggests that the major 0.7310 support is unlikely to be challenged anytime soon. Indicators are mostly flat now and this suggests that AUD could continue to trade within the month-to-date range between 0.7310 and 0.7485 for a while more.
NZD/USD: Neutral (since 06 Jul, 0.6795): NZD is expected to trade sideways for now. No change in view.
Despite the relatively strong recovery yesterday, NZD does not appear to be ready to embark on a sustained directional move. That said, the improved undertone suggests it has moved into a higher trading range of 0.6740/0.6880 instead of the 0.6710/0.6850 expected previously. Looking further out, a clear break of 0.6880 would greatly increase the odds for a move to 0.6930.
USD/JPY: Neutral (since 23 Jul 18, 111.20): Short-term low in place but any USD strength is viewed as part of a consolidation range.
Our recent expectation for USD to test the July’s low of 110.25 was wrong as it surged and took out the ‘key resistance’ at 111.80 (overnight high of 111.95). While the daily gain of +0.72% (NY close of 111.86) is relatively large, we are not convinced that USD has moved into a bullish phase. That said, USD has likely made a short-term low near 110.60 last week but any further strength from here is viewed as part of a 110.60/112.50 consolidation range and not the start of a sustained up-move.