EUR/USD: Neutral (since 05 Jun 18, 1.1700): A retest of 1.1500/10 support zone seems likely.
As highlighted last Friday (03 Aug, spot at 1.1585), while we maintain a neutral stance, the risk has shifted to the downside and the major 1.1500/10 support zone is likely to be retested (note that EUR touched 1.1506 in May and 1.1507 in June). At this stage, the odds for a sustained move below this major support zone are not high but the current downward pressure is expected to increase from here unless EUR can move and stay above the ‘key resistance’ level of 1.1640 (previously at 1.1680). Looking further ahead, a clear break of 1.1500/10 could potentially lead to a rapid drop to the next major at 1.1365
GBP/USD: Neutral (since 25 Jun, spot at 1.3265): Dip below July’s 1.2958 low would not be surprising.
We continue to hold the same view wherein we expect GBP to stay under pressure unless it can reclaim the ‘key resistance’ level of 1.3100 (level unchanged from last Friday). A dip below the year-to-date low of 1.2958 would not be surprising but for now, we are seeing another major support at 1.2880 and at this stage, the prospect for a sustained move below this level is not high (1.2930 is already a relatively strong support).
AUD/USD: Neutral (since 05 Jul 18, 0.7380): AUD is likely caught in a broad range for now.
AUD recovered most of its loss made earlier last week as it rebounded strongly and closed on a firm note last Friday (NY close of 0.7397, +0.46%). The price action was not surprising as we indicated on Friday “we do not detect a significant improvement in downward pressure”. From here, we continue to hold same view that AUD is caught in a broad range and is expected to trade sideways between 0.7310 and 0.7485.
NZD/USD: Neutral (since 06 Jul, 0.6795): A fresh year-to-date low seems likely.
NZD dipped to a 2-week low of 0.6721 last Friday before rebounding to end the day at 0.6748 (NY close of 0.6748, +0.10%). The mild recovery does not change our current view wherein we see risk of NZD breaking below the year-to-date low of 0.6688. At this stage, it is unclear whether any weakness in NZD can be sustained as 0.6670/80 is major long-term support zone and is unlikely to yield so easily. All in, we expect NZD to stay under pressure until it can reclaim the ‘key resistance’ that is currently at 0.6810.
USD/JPY: Neutral (since 23 Jul 18, 111.20): USD is still in a consolidation phase.
We have held the same view since last Wednesday (01 Aug, spot at 111.80) that we are not convinced that the post-BOJ rally in USD is the start of a bullish phase. USD subsequently hit of 112.14 and has since surrendered a big part of its gains. We continue to view the current movement as part of a consolidation phase and expect USD to trade sideways, albeit likely at narrower range of 110.60/112.20 (from previous expectation of 110.60/112.50).