EUR/USD: Risk of EUR revisiting 1.1174 has increased.
We indicated yesterday that “if EUR were to close below 1.1220 in NY, it would indicate that it is ready to revisit the 07 Mar low of 1.1174”. EUR subsequently dipped to 1.1212 before ending the day at 1.1220. The prospect for EUR to revisit 1.1174 has clearly increased but we still prefer to wait for NY close below 1.1220. On the upside, only a move 1.1300 would indicate that the current nascent build-up in downward pressure has eased.
GBP/USD: GBP is expected to trade sideways within a broad range.
After trading sideways within relatively narrow ranges for a few days, GBP lurched lower and hit an overnight low of 1.3035. For now, we continue to hold the same view as on Tuesday (26 Mar, spot at 1.3205) wherein GBP is trading sideways within a broad 1.2950/1.3400 range. Looking ahead, a break below 1.2950 would increase the risk for a sustained period of GBP weakness. For now, the prospect for such a scenario is not high but it would increase quickly unless GBP can recover back above 1.3190 within the next few days
AUD/USD: No clear direction, AUD is expected to trade sideways.
There is not much to add as AUD traded sideways yesterday before ending the day slightly lower at 0.7075 (-0.14%). We continue to hold the same view as on Monday (25 Mar, spot at 0.7080) wherein there is no clear direction and AUD is expected to trade sideways. For now, a 0.7040/0.7190 range is likely enough to contain the price action in AUD.
NZD/USD: Strong drop could test the early-March low of 0.6745.
After rebounding briefly to a high of 0.6828 yesterday (28 Mar), NZD dropped back quickly and hit a low of 0.6775. The price action reinforces our view wherein the strong decline post-RBNZ could lead to a test to the 0.6745 low registered in early-March (see update on Wed, 27 Mar). A break of 0.6745 is not ruled out but there is another strong support at 0.6720 (low in February) and the prospect for a break of the latter level is not high. On the upside, the ‘key resistance’ has moved lower to 0.6860 from 0.6910 previously.
USD/JPY: USD has moved into a sideway-trading phase.
While we held the view that USD is “under pressure”, we noted on Wed (27 Mar, spot at 110.50) that “USD has to move and stay below 110.00 within these few days or a break of 110.95 would not be surprising and would indicate the start of a sideway-trading phase”. USD attempted but failed to break 110.00 as it rebounded strongly after touching a low of 110.01 yesterday. While the 110.95 ‘key resistance’ is still intact (overnight high of 110.82), the price action is enough to indicate that USD has moved into a sideway-trading phase, expected to be between 110.00 and 111.50.