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Jun 17 - 09:48 AM
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD - UOB
First appeared on eFXplus on Jun 17 - 08:25 AM

EUR/USD: 

24-HOUR VIEW EUR could dip below 1.1200 but the next support at 1.1170 is unlikely to come into the picture. Last Friday, we expected EUR to “test the 1.1250 support first” before “a recovery can be expected”. However, stronger than expected US retail sales data sent EUR plunging below this level as it hit 1.1200 before ending the day on a weak note at 1.1207. The sharp and rapid drop appears to be running too fast, too soon. From here, while a dip below 1.1200 seems likely, the next support at 1.1170 is unlikely to come into the picture. On the upside, EUR has to reclaim 1.1260 in order to indicate that the current weakness has stabilized (minor resistance is at 1.1240).

1-3 WEEKS VIEW Bias for is for EUR to move lower and test 1.1150. While we indicated since last Thursday (13 Jun, spot at 1.1295) that EUR “has to move and stay above 1.1335 within these 1 to 2 days or a break of the 1.1250 ‘key support’ would not be surprising”, the ease of which it sliced through 1.1250 and the subsequent plunge to 1.1200 was not expected (the subsequent 1-day decline of 0.60% is the largest in 7 weeks). The ‘positive phase’ that started on 04 Jun (spot at 1.1245) has clearly ended. The immediate bias has shifted to the downside but we do not expect the current weakness to be sustained and for the next couple of weeks, we see low chance of EUR threatening the critical 1.1100 support. That said, the current soft patch has room to test 1.1150. Only a move above 1.1290 would indicate that the current mild downward pressure has eased.

GBP/USD: 

24-HOUR VIEW GBP is likely to consolidate its loss and trade sideways, expected to be within a 1.2560/1.2630 range. Expectation for GBP to move higher last Friday was incorrect as it broke several strong support levels with ease and plummet to 1.2580. While further weakness is not ruled out in the coming days, the current decline has moved deep into oversold territory and GBP is unlikely to weaken much from an intraday point of view. From here, GBP is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today, 1.2560/1.2630.

1-3 WEEKS VIEW GBP is expected to trade with a downside bias but break of 1.2500 is unlikely. After trading sideways and in relatively quiet manner for more than a week, GBP lurched lower and touched 1.2580 last Friday. The low is just above the bottom of our expected 1.2570/1.2770 sideway-trading range that we first indicated on (04 Jun, spot at 1.2665). From here, the ‘sideway-trading phase’ appears to have ended but despite the sharp drop of 0.64% last Friday, downward momentum has not improved by much. However, the underlying tone has clearly weakened and GBP is expected to trade with a downside bias. For now, we do not expect a break of the strong 1.2500 support. Only a move above 1.2680 would indicate that the current mild downward pressure has eased.

AUD/USD: 

24-HOUR VIEW AUD is expected to trade sideways, likely between 0.6860 and 0.6900. We expected AUD to weaken last Friday but held the view that “the next support at 0.6865 is unlikely to come into the picture”. Against our expectation, AUD dropped to 0.6862 before recovering slightly. In view of the oversold conditions, further sustained decline is not expected for today. AUD is more likely to consolidate and trade sideways, expected to be between 0.6860 and 0.6900.

1-3 WEEKS VIEW A NY closing below 0.6865 would indicate that a move to 0.6810 has started. While we shifted our narrative for AUD from to “trade with an upside bias” to “trade sideways” last Thursday (13 Jun, spot at 0.6930), the pace of which the bottom of the expected 0.6865/0.6990 sideway trading range was tested came a surprise (AUD touched 0.6862 during NY hours last Friday). Downward momentum has clearly improved and from here, if AUD were to register a NY close below 0.6865, it would indicate the start of a move to 0.6810. The prospect for such a move is quite high unless AUD can reclaim 0.6935 within these few days.


NZD/USD: 

24-HOUR VIEW NZD could dip below the year-to-date low of 0.6482 but the next support at 0.6455 is not expected. Instead of “drifting lower”, NZD lurched lower as it lost a whopping 1.10% (closed at 0.6493). From here, NZD could dip below last month (and year-to-date) low of 0.6482. For today, the next support at 0.6455 is not expected to come into the picture. On the upside, 0.6540 is expected to be strong enough to cap any intraday NZD strength (minor resistance is at 0.6515).

1-3 WEEKS VIEW NZD has moved into a ‘negative phase’ but 2018 low of 0.6424 could be out of reach. While we expected NZD to ‘trade sideways’ since last Wednesday (12 Jun, spot at 0.6585), we held the view the soft underlying tone could “lead to a probe of the bottom of sideway trading range of 0.6530/0.6630”. Instead of ‘probing’ 0.6530, NZD crashed through this strong support during last Friday NY session and plunged to 0.6488 (the subsequent outsized 1-day decline of 1.08% is the largest since late March). In view of the vastly improved downward momentum, a break of year the year-to-date low of 0.6482 would not be surprising. However, last year’s low of 0.6424 could be out of reach for the current ‘negative phase’. On the upside, the 0.6570 ‘key resistance’ is expected to cap any NZD recovery, at least for the next one week or so.

Source:
UOB Research/Market Commentary

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