EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR to trade sideways for now.
There is not much to add to the update from yesterday (26 Nov, spot at 1.1335). As indicated, there is no change to our view wherein we continue to expect EUR to trade sideways. However, downward pressure has ticked up and the immediate risk is tilted to the downside even though any weakness in EUR is viewed as part of a 1.1280/1.1420 consolidation range. Looking ahead, a break of 1.1280 is not ruled out but for the next one week or so, the 1.1213 low seen two weeks ago is unlikely to come into the picture.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Diminished prospect of GBP making fresh 2018 low. No change in view.
GBP traded in a relatively quiet manner before ending the day lower by -0.42% (NY close of 1.2820). As highlighted last Friday (23 Nov, spot at 1.2875), the prospect for GBP making fresh 2018 low has diminished but only a break of the 1.2950 ‘key resistance’ would indicate that the current downward pressure has eased. Meanwhile, in order to revive the flagging momentum, GBP has to move and stay below 1.2800 or a break of the 1.2950 ‘key resistance’ would not be surprising.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Short-term top in place; AUD to trade sideways for now. No change in view.
AUD traded in a quiet manner over the past couple of days and there is no change to our view as highlighted last Wednesday (21 Nov, spot at 0.7215). As indicated, the 0.7338 high on 16 Nov is deemed as a short-term top and AUD is expected to stay below this top for a couple of weeks and trade sideways. In other words, the current movement is part of an on-going consolidation phase (expected to be between 0.7180/0.7320).
NZD/USD: Neutral (since 20 Aug 18, 0.6625): Short-term top in place, NZD to trade sideways for now.
We have maintained the same view since last Wednesday (21 Nov, spot at 0.6790) wherein NZD has made a short-term top at 0.6883 on 16 Nov. The current movement is viewed as an on-going consolidation phase and NZD is expected to trade sideways. That said, the immediate bias is tilted to the downside but any weakness is viewed as part of a 0.6720/0.6860 range. Looking further ahead, a clear break of 0.6720 would suggest a ‘deeper pull-back’ towards 0.6690.
USD/JPY: Neutral (since 09 Oct 18, 113.10): Risk is for USD to test the top of the range at 114.00 first.
The strong rise in USD and the break of the 113.40 ‘key resistance’ yesterday has put paid to our expectation for “USD to weaken further to 112.00”. As indicated in recent updates, a break of 113.40 would suggest downward pressure has eased. However, it is too soon to expect a sustained rise in USD. That said, the near term risk is for USD to test the top of the expected 112.70/114.00 consolidation range at 114.00 first. For the next one week, the prospect for a clear break above the month-to-date top of 114.20 is not high (there is another major resistance at 114.54, the high in October).