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Jun 24 - 01:24 AM
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - UOB
First appeared on eFXplus on Jun 24 - 12:00 AM

EUR/USD: 

24-HOUR VIEW Rally has scope to extend above 1.1400 but for today, the major 1.1450 level is not expected to come into the picture. We woefully underestimated EUR strength as instead of “edging above 1.1320”, it blew past this level and rocketed to 1.1377. While overbought, the rally has scope to extend above 1.1400. For today, the next major resistance at 1.1450 is not expected to come into the picture. On the downside, 1.1320 is deemed as strong enough to hold any intraday pull-back (minor support is at 1.1345).

1-3 WEEKS VIEW Scope for rally to extend further but EUR is expected to face solid resistance at 1.1450. While our expectation from last Friday (21 Jun, spot at 1.1290) that “EUR is likely to move into a ‘positive phase’ soon” was not wrong, the timeliness of the call could be ‘earlier’. EUR not only eclipsed several strong resistance levels with ease but also hit a 3-month high of 1.1377 before ending the week higher by a whopping 1.41% (NY close of 1.1366). The strong and impulsive rally suggests there is scope for the current ‘positive phase’ to extend further even though March’s peak near 1.1450 is expected to offer solid

GBP/USD:  

24-HOUR VIEW GBP could move above the month-to-date high of 1.2763 but 1.2800 is unlikely to yield so easily. Last Friday, we were of the view the “advance in GBP could edge above 1.2730 but the month-to-date high of 1.2763 is likely out of reach”. GBP subsequently rose to 1.2748 before closing right at the high. Upward momentum has improved and for today, a move above 1.2763 would not be surprising but the next resistance at 1.2800 may not yield so easily. Support is at 1.2715 followed by 1.2685.

1-3 WEEKS VIEW A NY closing above 1.2763 would indicate start of a ‘positive phase’. Our narrative from last Thursday (20 Jun, spot at 1.2655) wherein the “uptick in momentum suggests GBP could test the month-to-date high at 1.2763” appears to be on track as GBP touched 1.2748 last Friday (21 Jun). While it is early days yet, there are some nascent signs that GBP could have made a short-term at 1.2507 last week. Meanwhile, GBP has to register a NY closing above 1.2763 in order to indicate the start of a ‘positive phase’ that could potentially lead to a rise towards 1.2850. On the downside, only a move below 1.2650 would indicate that the current upward pressure has eased.

AUD/USD: 

24-HOUR VIEW AUD could move higher but 0.6980 could be just out of reach for now. While AUD “edged higher” as expected, it didn’t quite reach the level indicated at 0.6950 (high of 0.6938). The underlying tone has improved and for today, we see chance for AUD to move above 0.6950. However, the next resistance at 0.6980 could be just out of reach for now. Support is at 0.6920 followed by 0.6900.

1-3 WEEKS VIEW AUD has moved into a sideway-trading phase, likely to probe the top of the range first. There is not much to add to the update from last Friday (21 Jun, spot at 0.6920). As indicated, AUD has moved into a ‘sideway-trading phase’. However, the improved underlying tone suggests AUD is likely to probe the top of the expected 0.6860/0.6980 range first. For now, the prospect for a sustained rise above 0.6980 is not high but it would continue to increase as long as AUD does not move below 0.6860.

NZD/USD: 

24-HOUR VIEW NZD could probe the 0.6620 resistance but any gain is viewed as part of 0.6570/0.6620 sideway trading range. Instead of trading sideways, NZD dropped to 0.6555 before rebounding quickly to end day just below the high of 0.6605. Despite the rapid bounce, upward momentum has not improved by much. That said, it could probe the 0.6620 resistance even though any gain is viewed as part of a 0.6570/0.6620 range.


1-3 WEEKS VIEW Recovery in NZD could test 0.6620. No change in view from last Friday, see reproduced update below.

While we indicated yesterday (20 Jun, spot at 0.6555) that “the recovery in NZD could test 0.6620”, the rapid advance of +0.70% (NY close of 0.6585) was not exactly expected. Upward momentum has improved further and from here, a break of 0.6620 would indicate the start of ‘positive phase’ that could challenge the month-to-date high near 0.6680. The prospect for such a scenario is not very high for now but it would continue to increase as long as NZD does not move back below 0.6540 (level was at 0.6515 yesterday).

USD/JPY:  

24-HOUR VIEW USD could continue to trade sideways, likely not moving much out of last Friday’s 107.04/107.73 range. We highlighted last Friday that USD is “deep in oversold territory and the next support at 107.00 is unlikely to come under serious threat”. We added, USD is “more likely to consolidate its loss and trade sideways between 107.00 and 107.65”. The subsequent price action was close to our narrative as USD rebounded from 107.04 to 107.73 before dropping back to end the day little changed at 107.30. Indicators are still unwinding from oversold conditions and USD could continue to trade sideways for now, likely not moving much out of last Friday’s 107.04/107.73 range.

1-3 WEEKS VIEW Break of 107.00 would shift focus to 106.60. USD tried but failed to break the 107.00 level that was first highlighted last Thursday (20 Jun, spot at 107.70). The price action was not exactly surprising as deeply oversold shorter-term conditions suggest USD could consolidate and trade sideways for 1 to 2 days. As long as the ‘key resistance’ at 108.00 is intact (no change in level from last Friday), the current ‘negative phase’ that started 3 weeks ago (03 Jun, spot at 108.30) appears to have legs to extend lower. From here, a break of 107.00 would indicate that USD is ready to tackle the next support at 106.60.

Source:
UOB Research/Market Commentary

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