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Thomson Reuters
Jun 11 - 01:24 AM
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - UOB
First appeared on eFXplus on Jun 11 - 12:00 AM

EUR/USD:

24-HOUR VIEW EUR is expected to trade sideways, likely within a 1.1280/1.1340 range. In line with expectation, EUR traded sideways even though the registered range of 1.1288/1.1337 was narrower than our expected range of 1.1280/1.1340. The quiet price action offers no fresh clue and EUR could continue to trade sideways for now. Expected range for today, 1.1280/1.1340.

1-3 WEEKS VIEW ‘Positive phase’ in EUR is still intact, a test of 1.1380 would not be surprising. No change in view from yesterday, see reproduced update below.

In our last update on 04 Jun (spot at 1.1245), we held the view that EUR has “moved into a ‘positive phase’” and “could move to 1.1300”. We added, the prospect for EUR strength to extend to 1.1380 is not high. EUR closed below 1.1300 on Wednesday and Thursday before surging higher on Friday (07 Jun) and hit 1.1347 (on a weekly basis, EUR gained +1.47%, the largest 1-week advance since Aug 2018). While the price action continues to suggest further EUR strength, upward momentum has not improved by as much as preferred. That said, a test of 1.1380 would not be surprising but whether EUR can maintain toehold above this level is left to be seen. All in, the ‘positive phase’ could last for a while more and only a break of 1.1230 (‘key support’ previously at 1.1155) would indicate that a short-term top is in place

GBP/USD: 

24-HOUR VIEW GBP could dip to 1.2635; next support at 1.2600 is unlikely to come into the picture. We were of the view yesterday that GBP “could edge lower to 1.2685 but a sustained decline is not expected”. The expected decline went deeper than expected as GBP touched 1.2653 before rebounding quickly. Despite the bounce from the low, the underlying tone has weakened and the intraday risk is tilted to the downside. From here, barring a move above 1.2735 (minor resistance at 1.2715), GBP is expected to dip to 1.2635 before the current weakness should stabilize (the next support at 1.2600 is unlikely to come into the picture).

1-3 WEEKS VIEW GBP is expected to trade sideways. There is not much to add to the update from yesterday (11 Jun, spot at 1.2720). As highlighted, the advance to 1.2763 last Friday (07 Jun) lacks momentum and GBP is still in a ‘sideway-trading’ phase. In other words, we continue to expect GBP to trade within the 1.2570/1.2770 range that was first indicated last Tuesday (04 Jun). Looking ahead, barring a break of 1.2570, the current ‘sidewaytrading’ phase is likely to be resolved by a move above the top of the expected range.

AUD/USD: 

24-HOUR VIEW Soft patch in AUD could extend to 0.6940. Expectation for AUD to “retest 0.7025” was incorrect as it dropped to an overnight low of 0.6957 before ending the day on a soft note (NY close of 0.6960). Despite the relatively large drop, downward momentum has not improved by much. That said, there is scope for the current soft patch in AUD to extend to 0.6940. The next support at 0.6920 is likely ‘safe’ for today. Resistance is at 0.6980 but only a move above 0.7000 would indicate that the current mild downward pressure has eased.

1-3 WEEKS VIEW Upward momentum is still slightly positive; AUD could grind higher to 0.7050. We highlighted yesterday (10 Jun, spot at 0.7000) that despite the strong advance to 0.7022 last Friday (07 Jun), “upward momentum has not improved by much and the risk of a sustained advance in AUD is not high”. That said, the subsequent sharp pull-back that hit an overnight low of 0.6957 was not exactly expected. For now, upward momentum is still slightly positive and we continue to see chance for AUD to grind higher to 0.7050. However, AUD has to move and stay above 0.7000 within these 1 to 2 days or upward momentum would wane rapidly. A break of 0.6920 would indicate that the current mild upward pressure has eased and AUD would then likely to trade sideways for a period.

NZD/USD: 

24-HOUR VIEW A dip below 0.6600 below would not be surprising but next support at 0.6580 is unlikely to come into the picture. We held the view that “further intraday strength in NZD is unlikely” yesterday. However, instead of “trading sideways”, NZD staged a relatively deep pull-back that hit an overnight low of 0.6604. The soft daily closing of 0.6608 in NY suggests there is room for further weakness. While a dip below 0.6600 would not be surprising, the next support at 0.6580 is unlikely to come into the picture. Resistance is at 0.6630 followed by 0.6650.

1-3 WEEKS VIEW Prospect for further NZD strength has diminished. We indicated yesterday (10 Jun, spot at 0.6655) that “overbought conditions could limit gains to 0.6700” (note that NZD touched 0.6681 last Friday, 07 Jun). In that context, the subsequent sharp sell-off that came close to taking out the 0.6600 ‘key support’ came as a surprise (overnight low of 0.6604). The prospect for further NZD strength has clearly diminished and if 0.6600 were breached, it would indicate that the ‘positive phase’ that started last Tuesday 04 Jun (spot at 0.6585) has ended a bit earlier than expected.

Source:
UOB Research/Market Commentary

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