EUR/USD: Neutral (since 21 Aug 18, 1.1485): Vastly improved momentum suggests EUR could attempt to move to 1.1515.
EUR failed to build on the solid gains made on Wednesday (20 Mar) as it dropped back sharply to an overnight low of 1.1340. The low is not far above our 1.1330 ‘key support’. While the price action has dented the upward momentum, only a break of the ‘key support’ would indicate that EUR is not ready to move towards 1.1515 (our current view as highlighted yesterday, 21 Mar). Overall, in order to maintain the current momentum, EUR could not afford to ‘dither’ as it would greatly decrease the prospect for further EUR strength
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Prospect for a revisit of the 1.3000 is quite high.
GBP plunged to a low of 1.3004 before rebounding quickly to end the day at 1.3110, lower by -0.61%. The Brexit headlines driven price action took out the 1.3130 ‘key support’ and indicates that our recent view for GBP to “trade with a positive bias” is wrong. While the outsized drop has shifted the immediate risk to the downside, it is unclear at this stage if any weakness can be sustained. That said, the prospect for a revisit of the 1.3000 level appears to be quite high (the next support below this level is at the month-to-date low of 1.2945). All in, for the next several days, GBP is likely to remain under pressure unless it can reclaim 1.3230. Looking further out, the outlook for GBP is unclear and is largely dependent on Brexit.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is expected to advance further but 0.7200/20 zone is expected to offer solid resistance. No change in view from yesterday, see reproduced update below.
After trading in a relatively quiet manner for several days, AUD was jolted awake and surged to a high of 0.7150. While upward momentum has picked up strongly, there are several strong resistance levels and for now, it is not clear whether AUD can surmount these formidable levels. All in, we expect AUD to advance further in the coming days but expect 0.7200/0.7220 zone to offer solid resistance. If AUD can break through this zone, it would greatly increase the odds for a move to the year-to-date high near 0.7295. To put it another way, we hold ‘positive’ view in AUD now and only a break of the 0.7070 ‘key support’ would indicate the current upward pressure has eased.
NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD to strengthen further, break of 0.6942 would shift focus to 0.6970.
NZD touched a high of 0.6938 yesterday, just a few pips below the February’s peak of 0.6942. As highlighted yesterday (21 Mar, 0.6915), we are anticipating NZD to move above 0.6942 and a break of this level would shift the focus to 0.6970. That said, the subsequent rapid retreat from the 0.6938 high was not exactly expected as NZD closed lower by end of the day (-0.10%, 0.6876). While the price action is not ‘ideal’ for our view, only a break of the 0.6845 ‘key support’ would indicate that our expectation is incorrect.
USD/JPY: Neutral (since 09 Oct 18, 113.10): USD to stay on the defensive but expect solid support at 110.00. No change in view from yesterday, see reproduced update below.
Our expectation that “the bias for USD is tilted to the upside” is proven wrong as it plummeted overnight and cracked the 110.80 ‘key support’. While the impulsive drop has shifted the immediate risk to the downside, it is premature to expect a sustained decline. That said, we expect USD to stay on the defensive but any weakness is expected to encounter solid support at 110.00 (minor support at 110.30). On the upside, a break of ‘key resistance’ at 111.35 would indicate the current weakness has stabilized.