EUR/USD: Bearish (since 01 May 18, 1.2075): EUR has to stay below 1.1910/15 or the risk of a short-term low would increase quickly.
The 1.1915 ‘target’ that was first highlighted last Wednesday was exceeded marginally as EUR briefly hit a low of 1.1909 last Friday. The lack of a ‘follow-through’ upon the break of this critical level coupled with the subsequent quick recovery indicates that the current oversold momentum is finding it difficult to maintain its downside traction. That said, only a break above the ‘stop-loss’ at 1.2050 would indicate that the bearish phase that started early last week has ended. Until then, another ‘down-leg’ towards the next support at 1.1850 is not ruled out but in order for this to happen, EUR has to break clearly below 1.1910/15 and stay below this level within these 1 to 2 days or a prolonged consolidation at these lower levels would quickly increase the risk of a short-term low
GBP/USD: Bearish (since 01 May 18, 1.3765): Still bearish but odds for further weakness to 1.3458 are not high.
We highlighted last Friday (04 May, spot at 1.3570) that “in order to improve the prospect for a move to 1.3458, GBP has to stage an ‘impulsive and rapid’ break of the 1.3500 support”. GBP subsequently took out 1.3500 but rebounded quickly after touching a low of 1.3487. While further weakness to the year-to-date low at 1.3458 is still a possibility, shorter-term momentum has waned considerably and this coupled with oversold condition continues to suggest that the odds further weakness to 1.3458 are not high. On the upside, only a break of 1.3630 would indicate that the current bearish phase has ended.
AUD/USD: Bearish (02 May 18, 0.7485): Increasing risk of a short-term low.
AUD hit a high of 0.7561 last Friday, not far from the ‘stop-loss’ for our bearish view at 0.7570. The risk of a short-term low has increased further but we prefer to wait for a break of 0.7570 first before shifting to a neutral stance. In the meanwhile, AUD could trade sideways for a couple of days but unless AUD can stay below 0.7485 soon, the risk of a short-term low would increase further.
NZD/USD: Bearish (since 02 May 18, 0.7005): Increasing risk of a short-term low.
While the ‘stop-loss’ for our bearish view is still intact 0.7085 (high of 0.7052 last Friday), the combination of waning momentum and oversold condition continue to suggest an increasing risk of a short-term low. In order to revive the current flagging momentum, NZD has to stay below 0.7005 within these few days (or the risk of short-term low would increase further).
USD/JPY: Neutral (since 21 Feb 18, 107.35): Pull-back has scope to extend lower to 108.30.
As highlighted last Friday (04 May, spot at 109.15), a break of 108.80 would indicate that USD has made a short-term top at 110.02 last Wednesday, 02 May (USD subsequently hit a low of 108.62 during NY hours on Friday). However, there is no change to the current neutral outlook for USD but the current pull-back has scope to extend lower to 108.30 in the coming days (with lower odds for extension to 107.90). Only a break above the ‘key resistance’ at 109.85 would indicate that the immediate downward pressure has eased. On a shorter-term note, 109.50 is already a rather strong resistance.