EUR/USD: Neutral (since 05 Mar 18, 1.2335): Upward pressure dented but another attempt towards 1.2400 is not ruled out.
EUR traded in a relatively narrow 1.2305/1.2346 range last Friday before ending the day little changed. We continue to see chance for a move higher towards 1.2400 even though lackluster upward momentum suggests that a sustained break above this level is unlikely (there is another strong resistance at 1.2425). On the downside, only a move below 1.2280 would indicate that the current mild upward bias has eased. Looking further out and from a longer-term perspective, the current neutral phase that started early last month is clearly intact. Note that current level of 1.2330 is almost the same as on 05 Mar, the day we adopted a neutral stance. At this stage, there is no indication that EUR is ready to embark on a sustained directional move anytime soon.
GBP/USD: Neutral (since 07 Mar 18, 1.3895): Another ‘up-leg’ is not ruled out even though year-to-date high of 1.4346 is likely out of reach.
GBP rose to a high of 1.4296 during NY hours last Friday before easing off. While the prospect for a sustained rally is still not high, the rapidly improving momentum suggests that another ‘up-leg’ could not be ruled out even though the year-to-date peak of 1.4346 is likely out of reach (1.4310 is already quite a strong resistance). From a shorter-term perspective, the current rally is at ‘over-stretched’ levels and in order to maintain the current impetus, GBP should continue to advance quickly as a consolidation at these overbought levels would lead to a rapid loss in momentum. Overall, we expect GBP to stay supported and only a clear break below the ‘key support’ at 1.4145 (level unchanged) would indicated that a short-term top is in place. Minor support is at 1.4205.
AUD/USD: Neutral (since 22 Mar 18, 0.7770): Corrective rebound has scope to extend higher to 0.7825.
We have maintained the same view since last Wednesday (11 Apr, 0.7760) that the corrective rebound in AUD “has scope to extend higher to 0.7825”. After holding below the short-term 0.7795/00 resistance for a couple of days, AUD broke above this level to hit a high of 0.7810 last Friday. Despite the rapid pull-back from the top, the undertone is still positive and another push higher to 0.7825 is not ruled out. That said, as highlighted previously, any advance is viewed as a “correction” and the strong 0.7825 resistance may not be easy to break. Only a move back below 0.7720 (‘key support’ previously at 0.7695) would indicate that a short-term top is in place.
NZD/USD Neutral (since 05 Feb 18, 0.7280): Odds for further NZD strength have diminished.
NZD eked out a ‘fresh high’ of 0.7395 last Friday before reversing most of its gain and closed lower for the day. Upward pressure has been dented but as long as 0.7320 is not clearly taken out, there is still room for another attempt to move towards the year-to-date high of 0.7435/40 even though the odds for such a move have diminished considerably.
USD/JPY: Neutral (since 21 Feb 18, 107.35): USD is expected to trade sideways.
We noted last Friday (13 Apr, 107.25) the improved undertone “could lead to a move above 107.50” but “a break above the top of the expected 106.20/107.90 consolidation range is not expected”. USD subsequently rose to a high of 107.77 before easing off to end the day unchanged. The price action reinforces our current view and we continue expect USD to trade sideways within the range mentioned above.