EUR/USD: Bearish (since 01 May 18, 1.2075): Anticipating a move to the year-to-date low of 1.1915.
EUR registered an ‘inside day’ yesterday and the recent strong downward momentum has eased somewhat. While we continue to anticipate a move to the year-to-date low at 1.1915, oversold shorter-term condition suggests that EUR could consolidate for a couple of days before embarking on the next ‘down-leg’. From here, 1.1915 is viewed as a rather critical support and a break of this level could lead to an accelerated decline in EUR towards 1.1850 followed by 1.1800.
Bearish (since 01 May 18, 1.3765): Still bearish but odds for further weakness to 1.3458 are not high.
GBP dipped to a low of 1.3537 yesterday before rebounding quickly. Shorter-term downward momentum has eased considerably and while the outlook for GBP is still deemed as bearish, the odds for further GBP weakness towards the next major support at 1.3458 (year-to-date low) are not high at this stage. In order to improve the prospect for a move to 1.3458, GBP has to stage an ‘impulsive and rapid’ break of the 1.3500 support. Otherwise, a prolonged consolidation at these levels would lead to further loss in momentum and increase the risk of a short-term low.
AUD/USD: Bearish (02 May 18, 0.7485): Increasing risk of a short-term low.
The strong rebound in AUD yesterday that hit a high of 0.7543 came as a surprise. While the ‘stop-loss’ for our bearish view at 0.7570 is still intact, the risk of a short-term low has increased considerably. Unless AUD can break and hold below 0.7485 by end of today’s NY session, a break of 0.7570 would not be surprising and would indicate that AUD has made a short-term low at 0.7473 on Tuesday (01 May). Looking further ahead, a break of 0.7570 suggests that AUD has moved into a correction/consolidation phase (too early to expect a major bullish reversal).
NZD/USD: Bearish (since 02 May 18, 0.7005): Increasing risk of a short-term low.
The strong gain of +0.72% made by NZD yesterday came as a surprise. While the ‘stop-loss’ level for our bearish view at 0.7085 is still intact, the risk of a short-term low has increased considerably. Unless NZD can move and stay below 0.7005 by end of today’s NY session, a break of 0.7085 would not be surprising. A break of 0.7085 would indicate that NZD has moved into correction/consolidation phase and that the 0.6985 low seen Wednesday (02 May) is a short-term low.
USD/JPY: Neutral (since 21 Feb 18, 107.35): USD is close to making a short-term top.
In recent updates, we indicated that 110.00 is of ‘high importance’ and only a NY closing above this level would suggest that USD has moved into a bullish phase. While the failure to break clearly above this level was not surprising (high of 110.02 on Wednesday, 02 May), the subsequent sharp and rapid decline was not exactly expected (USD closed lower by -0.59% yesterday). The combination of waning momentum on overbought condition suggest that 110.02 is likely a short-term top but only a break of 108.80 would indicate the start of a deeper pull-back towards 108.30 (with lower odds for extension to 107.90). The prospect for a deeper pull-back is not that high at this stage but would increase quickly unless USD can move and hold above 109.55 within these 1 to 2 day