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

EUR/USD: 

24-HOUR VIEW EUR could edge above last week’s 1.1347 peak but 1.1380 is unlikely to come into the picture. While our view for EUR to trade sideways yesterday was not wrong, the registered range of 1.1300/1.1337 was narrower than our expected 1.1280/1.1340. Momentum indicators have improved a tad and for today, EUR could edge above last week’s peak of 1.1347. That said, the next resistance at 1.1380 is unlikely to come into the picture. On the downside, only a move below 1.1300 would indicate the current mild upward pressure has eased.

1-3 WEEKS VIEW ‘Positive phase’ in EUR is still intact, a test of 1.1380 would not be surprising. After rising to a 2-1/2 month high of 1.1347 last Friday (07 Jun), EUR has not been able to make much headway on the upside. As highlighted over the past couple of days, while the price action continues to suggest further EUR strength, upward momentum has not improved by much. For now, we still think the ‘positive phase’ that started last Tuesday (04 Jun, spot at 1.1245) could test the strong 1.1380 resistance. That said, it is left to be seen whether EUR can maintain a toehold above this level. On the downside, a breach of the 1.1250 ‘key support’ (level was previously at 1.1230) would indicate that the ‘positive phase’ has run its course.

GBP/USD: 

24-HOUR VIEW GBP is expected to trade sideways, likely within a 1.2690/1.2760 range. Expectation for GBP to “dip to 1.2635” did not materialize as it rebounded after touching 1.2671. While downward pressure has eased, it is too early to expect a sustained up-move. The current movement is more akin to a consolidation phase. In other words, GBP is expected to trade sideways albeit with an upside bias. Expected range for today, 1.2690/1.2760.

1-3 WEEKS VIEW GBP is expected to trade sideways. No change in view from yesterday, see reproduced update below.

There is not much to add to the update from yesterday (10 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 AUD is expected to trade sideways, likely between 0.6940 and 0.6980. We highlighted yesterday the “soft patch in AUD could extend to 0.6940”. AUD subsequently drifted lower and touched 0.6948 before trading sideways. The mild downward pressure is beginning to wane and the current price action is deemed as the early stages of a consolidation phase. In other words, AUD is expected to trade sideways, likely between 0.6940 and 0.6980.

1-3 WEEKS VIEW Upward momentum is still slightly positive; AUD could grind higher to 0.7050. No change in view from yesterday, see reproduced update below.

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 Weakness in NZD could test 0.6560 first before stabilizing. We expected NZD to “dip below 0.6600” yesterday but were of the view “the next support at 0.6580 is unlikely to come into the picture”. However, NZD subsequently moved below 0.6580 and touched 0.6569. While the decline appears to be running ahead of itself, NZD could test the next support at 0.6560 first before the current weakness stabilizes. On the upside, only a move above 0.6610 would indicate that a short-term bottom is in place.

1-3 WEEKS VIEW NZD is expected to trade sideways. We highlighted yesterday the “prospect for further NZD strength has diminished” and the subsequent breach of the 0.6600 ‘key support’ was not surprising. The price action indicates that the ‘positive phase’ that started last Tuesday (04 Jun, spot at 0.6585) has ended. From here, NZD is deemed to have moved into a ‘sideway-trading’ phase even though the immediate bias is for it probe the bottom of the expected 0.6530/0.6630 range.

USD/JPY: 

24-HOUR VIEW USD could trade between 108.30 and 108.80. Instead of “drifting lower to 108.10”, USD rose to 108.79 before easing off. The relatively subdued price action offers no fresh clue. From here, USD could continue to trade in a quiet manner and trade between 108.30 and 108.80.

1-3 WEEKS VIEW Diminished odds for further USD weakness. USD edged higher and touched 108.79 yesterday (11 Jun) before easing off to end the day little changed at 108.50 (+0.06%). The price action offers no fresh clue and the current narrative still remains unchanged wherein the ‘negative phase’ in USD is still intact, the “odds for further weakness have diminished”. In order to revive the flagging momentum, USD has to move and stay below 108.30 within these few days or the risk of a break of the 109.30 ‘key resistance’ (no change in level) would increase quickly. Looking forward, if the ‘key resistance’ is taken out, it would signal the start of a ‘sideway-trading’ phase that could last for a while.

Source:
UOB Research/Market Commentary

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