EUR/USD Neutral (since 05 Jun 18, 1.1700): EUR has moved into a consolidation range.
Our recent view that EUR “is not ready to reenter a bearish phase just yet” was proven right as it staged a strong up-move last Friday and hit a high of 1.1675. While this level was just below the ‘key resistance’ at 1.1680, the subsequent strong daily closing is enough to indicate that the recent downward pressure has eased. However, there is no change to the neutral outlook but EUR has likely moved into a consolidation range and is expected to trade sideways within a 1.1550/1.1750. On a shorter-term note, the positive bias suggests that EUR is more likely to test the top end of the range first.
GBP/USD: Shift from bearish to NEUTRAL: GBP has moved into a consolidation range.
We highlighted last Friday (22 Jun, spot at 1.3245) that the “bearish phase appears to be close to ending” and the subsequent break of the ‘stop-loss’ at 1.3290 indicates that the outlook for GBP has shifted to neutral. Last week’s 1.3102 low is deemed as a short-term bottom and the current movement is viewed as the early stages of a consolidation phase. The immediate bias is tilted to the upside but at this stage, any up-move is viewed as part of a 1.3175/1.3360 consolidation range and not the start of a sustained directional move
AUD/USD: Bearish (since 20 Jun 18, 0.7385): Bearish phase appears to be close to ending.
While we highlighted in the recent updates that the bearish phase in AUD is “approaching oversold levels” and indicated that any “weakness is likely limited to 0.7330, 0.7300”, the strong rally last Friday came as a surprise (AUD gained +0.83% and closed at 0.7439). However, the ‘stop-loss’ level at 0.7455 is still intact and only a break of this level would confirm an end to the current bearish phase. This scenario appears to be likely unless AUD can move and stay below 0.7375 within these 1 to 2 days.
NZD/USD: Neutral (since 22 May 18, 0.6945): NZD to consolidate and trade sideways.
Despite the sharp decline in NZD for most of last week, we held the view that only a “NY close below 0.6850” would indicate that NZD has moved into a bearish phase. NZD hit a low 0.6821 on Thursday (21 Jun) before rebounding to close well above 0.6850. After the second straight day of strong gains on Friday, downward pressure has eased and the risk of a shift to a bearish phase has diminished. That said, it is premature to expect a sustained up-move as NZD is more likely to consolidate its recent loss and trade sideways at these lower levels, likely between 0.6840 and 0.6975.
USD/JPY: Neutral (since 21 Feb 18, 107.35): USD has likely moved into a broad consolidation phase. No change in view.
USD edged above the top of our expected 109.10/110.65 consolidation range but slumped after touching a high of 110.75. The price action reinforces our current neutral view and we continue to expect USD to trade sideways, still likely within a 109.10/110.65 range.