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Thomson Reuters
Jul 26 - 09:48 AM
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - UOB
First appeared on eFXplus on Jul 25 - 10:30 PM

EUR/USD: Neutral (since 05 Jun 18, 1.1700): Still neutral but likely to trade at a higher range. No change in view.

The price action in EUR over the past couple of days has been relatively muted and there is no further clue. From a longer-term perspective, the neutral phase that started in early June is still intact and we expect it to remain intact unless EUR can break clearly out of the June’s range of 1.1507/1.1851. In view of the recent lackluster price action, this is unlikely to happen any time soon. From a 1-3 weeks perspective, there is a slight upside bias even though any EUR strength is viewed as part of a higher 1.1640/1.1850 consolidation range and a sustained break above 1.1850 seems unlikely.

GBP/USD: Neutral (since 25 Jun, spot at 1.3265): Choppy price action has resulted in a mixed outlook. There is not much to add to yesterday’s update. Underlying tone has however improved and the top of the expected 1.3050/1.3250 range is likely to be tested soon. At this stage, the prospect for a clear break of the next resistance at 1.3300 is not high.

As highlighted in recent updates, the choppy price action over the past several days has resulted in a mixed outlook. Indicators are mostly neutral and the near-term direction is unclear. From a slightly longer-term perspective, the movement since early June appears to be tracing out a declining ‘expanding wedge’ but only a break above 1.3300 would indicate that GBP is ready to move higher. Meanwhile, we expect GBP to continue to trade sideways within a relatively broad 1.3050/1.3250 range.

AUD/USD: Neutral (since 05 Jul 18, 0.7380): AUD is likely trying to form a base. No change in view.

AUD traded sideways over the past few days and there are no further clues. We continue to hold the view that AUD is trying to form a base even though only a break of 0.7530 would indicate the start of a sustained up-move. Meanwhile, we expect AUD to trade sideways and after testing the bottom of the expected 0.7360/0.7485 consolidation range yesterday (low of 0.7359), the top of the range at 0.7485 would likely be probed next. At this stage, the odds for a clear break above 0.7485 are not high but a breach of this level would greatly increase the prospect for a move to the critical 0.7530 resistance.

NZD/USD: Neutral (since 06 Jul, 0.6795): NZD is expected to retest the 0.6860 level.

We have held the same view since Monday (23 Jul, spot at 0.6815) wherein we expected “NZD to retest the month-to-date high near 0.6860”. After the strong overnight up-move, this level appears to be within reach. As highlighted previously, a break of this rather strong resistance could trigger a quick rise to the next resistance at 0.6900. On the downside, support levels have moved higher to 0.6810 and 0.6785.

USD/JPY: Neutral (since 23 Jul 18, 111.20): Outlook is neutral but a test of the 110.25 month-to-date low seems likely.

We have held the same view since Monday (23 Jul, spot at 111.20) wherein while the outlook for USD is deemed as neutral, “the immediate pressure has shifted to the downside” and a “test of the month-to-date low near 110.25 would not be surprising”. The relatively weak daily close in NY yesterday bodes well for our view and we continue to anticipate the 110.25 level to be ‘tested’. In view of the current lackluster downward momentum, the prospect for a sustained break below this level is not high at this stage. All in, only a break back above the ‘key resistance’ at 111.80 would indicate that the current downward pressure has eased (ideally, USD should stay below 111.50 from here).

Source:
UOB Research/Market Commentary

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