EUR/USD: Neutral (since 05 Jun 18, 1.1700): A stronger corrective rebound to 1.1900 is not ruled out. No change in view.
After closing higher for four consecutive days, EUR slipped last Friday and closed -0.26% lower at 1.1766. Despite the ‘weak’ price action, we continue to detect a positive undertone and are not ruling out the possibility that EUR could stage a stronger corrective rebound to 1.1900. Only a break of the ‘key support’ at 1.1690 (level remains the same) would indicate the current positive bias has eased.
GBP/USD: Neutral (since 04 Jun 18, 1.3355): GBP has moved into a correction phase.
The recent mild upward pressure has eased as GBP dipped below the 1.3350 ‘key support’ yesterday (low of 1.3345). However, there is no change to the current neutral outlook but GBP is more likely to trade sideways for now, expected to be between 1.3250 and 1.3470 (we previously see scope for a stronger rebound to 1.3520)
AUD/USD: Neutral (since 11 Jun 18, 0.7600): AUD has moved into a consolidation phase. We just turned neutral on AUD yesterday and there is no change to the view.
Our recent bullish expectation (spot at 0.7650) was proven wrong quickly as AUD took out the ‘stop-loss’ level at 0.7565 last Friday (low of 0.7560). While the outlook for AUD still appears to be positive from a longer-term perspective, shorter-term indicators suggest that AUD has moved into a consolidation phase and is expected to trade sideways from here. Only a break back above last week’s top near 0.7675/80 would indicate that AUD has started the next up-leg towards 0.7740. In the meanwhile, we expect AUD to consolidate and trade sideways, likely within a 0.7530/0.7680 range.
NZD/USD: Neutral (since 22 May 18, 0.6945): NZD to trade sideways for now.
We highlighted in recent updates that NZD has “to stage the next ‘up-leg’ soon” or the risk of a break of the ‘key support’ at 0.6980 would increase quickly. NZD tried but failed to move above last week’s 0.7060 top yesterday as it slumped after touching an overnight high of 0.7053. The subsequent weak daily closing in NY is enough to indicate that the recent mild upward pressure has eased. However, there is no change to the neutral outlook but NZD is more likely to trade sideways from here, likely within a 0.6950/0.7060 range (we previously see scope for the rebound to ‘overshoot’ to 0.7080).
USD/JPY: Neutral (since 21 Feb 18, 107.35): Positive outlook could lead to a test of 111.00.
USD recovered all and more of the decline made late last week as it extended its gains after NY close and is currently approaching the strong 110.50 resistance. The sudden swing higher came as a surprise and from here, a clear break of 110.50 would indicate that the current USD strength could test the 111.00 resistance (with lower odds for extension to last month’s top near 111.40). Overall, the outlook for USD appears to be ‘positive’ as long as the ‘key support’ at 109.40 is intact.