EUR/USD: Short-term bottom in place; EUR is expected to trade with an upside bias.
After eking out ‘fresh’ lows for several days in a row, EUR staged a relatively strong rebound and tested our 1.1255 ‘key resistance’ (EUR touched 1.1255 during London hours). We have held the same view since last Friday (29 Mar) that EUR could revisit the 07 Mar low of 1.1174. That said, we have highlighted that “downward momentum is lackluster and the prospect for a sustained decline below 1.1174 is not high”. After yesterday’s price action, it is likely that EUR has registered a short-term bottom at 1.1181 on Tuesday (02 Apr). However, it is premature to expect a sustained up-move. The current movement is viewed as a corrective recovery and EUR is expected to trade with an upside bias towards 1.1300. At this stage, the probability for a move beyond the next resistance at 1.1330 is low. On the downside, 1.1174 is expected to remain unchallenged, at least for the next one week or so.
GBP/USD: GBP is expected to trade sideways within a broad range.
GBP took out our 1.3150 ‘key resistance’ yesterday as it hit a high of 1.3196. The price action is not exactly surprising as we indicated yesterday (03 Apr) that “in order to revive the current flagging momentum, GBP has to move and stay below 1.3045”. We previously held the view that the “risk of a break below 1.2950 has increased” but yesterday’s price action suggests that GBP is still ‘caught’ within a broad consolidation range. In other words, GBP is expected to trade sideways for the next couple of weeks, likely between 1.3020 and 1.3270. Looking ahead, GBP has to close firmly above 1.3270 in order to indicate that it ready to challenge last month’s peak at 1.3380.
AUD/USD: No clear direction, AUD is expected to trade sideways.
AUD recouped most of Tuesday’s (02 Apr) decline as it rebounded strongly from 0.7055. The price action reinforces our view wherein there is “no clear direction” and AUD is expected to trade sideways between 0.7040 and 0.7190 (same view since last Monday, 25 Mar, spot at 0.7080).
NZD/USD: Prospect for a sustained drop below the 0.6700/20 support zone is not high. No change in view from yesterday, see reproduced update below.
We have held the same view since last Wednesday (27 Mar, spot at 0.6830) wherein the strong decline post-RBNZ could lead to a “test of the 0.6745 low registered in early-March”. After about a week, NZD dropped to 0.6739 during overnight trading. As highlighted previously, a break of 0.6745 would not be surprising but the 0.6720 low in February is another strong support. Further down, there is another strong level at 0.6700 and the prospect for a sustained drop below this 0.6700/0.6720 support zone is not high. However, NZD has to move above 0.6820 (‘key resistance’ previously at 0.6860) to indicate that the current weak phase has stabilized.
USD/JPY: USD has moved into a sideway-trading phase.
There is not much to add as USD traded in a quiet manner for the past couple of days. We continue to hold the view that USD is in a ‘sideway-trading’ phase. As highlighted in recent updates, USD has to close above 111.70 in order to indicate that it ready to challenge last month’s 112.12 top. The prospect for a higher USD is not that high but it would increase as long as it doesn’t move back below 110.80.