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Thomson Reuters
Apr 08 - 09:48 AM
First appeared on eFXplus on Apr 08 - 12:36 AM

EUR/USD: Short-term bottom in place; EUR is expected to trade with an upside bias.

Despite rising in a relatively rapid manner last Wednesday (03 Apr) and hitting a high of 1.1255, EUR has not been able to make much headway on the upside (note that it registered successive ‘inside day’ on Thursday and Friday). For now, we continue to hold the view that EUR has registered a short-term bottom at 1.1181 last Tuesday (02 Apr). However, as highlighted previously, it is premature to expect a sustained up-move. The current movement is viewed as corrective recovery and EUR is expected trade with an upside bias towards 1.1300 (the next resistance at 1.1330 is not expected to come into the picture). On the downside, last month’s 1.1174 low is expected to remain unchallenged, at least for another week or so.

GBP/USD: GBP is expected to trade sideways within a broad range.

GBP touched a high of 1.3196 last Wednesday (03 Apr) but dropped sharply on Thursday and Friday. While the breach of 1.3000 last Friday (low of 1.2987) has increased the risk of a move below last month’s 1.2945 low, the prospect for a sustained decline below this level is not high (there is another strong support at 1.2900). All in, there is no clear direction for GBP and we continue to hold the view that it is trading sideways, albeit likely at a broader range of 1.2900/1.3200 (adjusted from 1.3020/1.3270 previously).

AUD/USD: No clear direction, AUD is expected to trade sideways.

There is really not much to add as AUD traded in a quiet manner last Friday before ending the day little changed at 0.7106 (-0.09%). We continue to continue to hold the same view as highlighted two Mondays ago (25 Mar, spot at 0.7080) wherein there is “no clear direction” and AUD is expected to trade sideways between 0.7040 and 0.7190. Most indicators are ‘neutral’ and at this stage, there is no ‘early’ indication that AUD is ready to embark on a sustained directional move anytime soon.

NZD/USD: Prospect for a sustained drop below the 0.6700/20 support zone is not high.

We have held the same view since last Wednesday (03 Apr, spot at 0.6750) wherein while NZD is still weak, the “prospect for a sustained drop below the 0.6700/20 support zone is not high”. NZD subsequently dropped to 0.6719 last Friday (05 Apr) before ending the day on a weak note (NY close of 0.6734, -0.28%). While downward momentum has clearly improved, we continue to see low odds for NZD breaking below the strong support zone mentioned above. However, in the event of a NY closing below 0.6700, it would indicate NZD is ready to tackle the next support at 0.6655. On the upside, only a break of the 0.6785 ‘key resistance’ (level previously at 0.6820) would indicate that the current downward pressure has eased.

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

While USD closed at a 3-week high of 111.73 last Friday, upward momentum remains lackluster and we are not convinced that USD is ready to move higher in a sustained manner. For now, we continue to hold the view that USD is in a sideway-trading phase albeit with an upside bias. On the downside, a break of 111.10 would indicate that the current mild upward pressure has eased.

UOB Research/Market Commentary


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