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Thomson Reuters
Apr 02 - 09:48 AM
First appeared on eFXplus on Apr 01 - 10:31 PM

EUR/USD: Room for EUR to revisit 1.1174. No change in view from yesterday (see reproduced update below) except ‘key resistance has moved lower to 1.1275 from 1.1300.

We highlighted in recent updates that a NY closing below 1.1220 would indicate that EUR is ready to “revisit the 07 Mar low of 1.1174”. While EUR closed marginally lower by -0.02% (1.1217) in NY last Friday, it is enough to indicate that there is room for EUR to revisit 1.1174. That said, downward momentum has not improved by much and the prospect for a sustained decline below 1.1174 is not high (next support levels are at 1.1145 followed 1.1110). On the upside, a move above 1.1300 would indicate the current mild downward pressure has eased.

GBP/USD: Risk of a break below 1.2950 has increased.

GBP rose to 1.3150 yesterday, just below the 1.3160 ‘key resistance’.The subsequent pull-back from the high and the sharp drop after NY close (low of 1.3030 at the time of writing) suggests that the near-term risk is still tilted to the downside. As highlighted yesterday (01 Apr, spot at 1.3025), the “risk of a break of 1.2950 has increased” and would continue to increase unless GBP can move above the ‘key resistance’. Looking ahead, a break of 1.2950 would suggest GBP has room to move to 1.2880.

AUD/USD: No clear direction, AUD is expected to trade sideways. No change in view from yesterday, see reproduced update below.

After two days of decline, AUD closed higher last Friday at 0.7097 (+0.31%) and extended its gain early this morning. From a perspective of 2-3 days, improved momentum indicators suggest the risk is tilted to the upside. However, from a multi-week perspective, there is no clear direction (we have held the same view since last Monday, 25 Mar, spot at 0.7080). In other words, AUD is expected to continue to trade sideways, likely between 0.7040 and 0.7190.

NZD/USD: Strong drop could test the early-March low of 0.6745.

There is not much to add as we continue to hold the same view since as last Wednesday (27 Mar, spot at 0.6830). As highlighted, the strong decline post-RBNZ could lead to a “test of the 0.6745 low registered in early-March”. A break of 0.6745 would not be surprising but the 0.6720 low in February is another strong support and the prospect for a break of 0.6720 is not high, at least for now. On the upside, only a move above the 0.6860 ‘key resistance’ (no change in level) would indicate that the current downward pressure has eased.

USD/JPY: USD has moved into a sideway-trading phase.

USD soared and hit an overnight high of 111.44, just below the top of our expected 110.00/111.50 sideway-trading range. The rapid rise has increased the odds for further USD strength even though we have doubts about the sustainability of any advance. For now, we continue to hold the view that USD is ‘trading sideways’ but if USD were to close above 111.70, it would be a good indication that USD is ready to challenge last month’s 112.12 peak. The prospect for a higher USD is not that high but it would increase quickly as long as it doesn’t move back below 110.80 within these couple of days.

UOB Research/Market Commentary


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