EUR/USD: Neutral (since 14 May 18, 1.1950): Immediate pressure is on the downside.
We highlighted yesterday (16 May, 1.1830) that the “immediate pressure is on the downside” and added, “further weakness to 1.1750 would not be surprising”. EUR subsequently hit a low of 1.1761 before rebounding. The price action reinforces our view wherein while the near-term outlook for EUR is negative, any weakness is unlikely to have enough momentum to move below last December’s low of 1.1715 (1.1750 is already a solid support). On the upside, only a move back above the ‘key resistance’ at 1.1900 (level adjusted lower from 1.1940) would indicate that the current downward pressure has ease.
GBP/USD: Bearish (since 01 May 18, 1.3765): Downward momentum has picked up again, expect further weakness to 1.3400. No change in view. The overnight rebound was surprisingly robust but only break of 1.3600 would indicate that the bearish phase has ended.
We have held the same view since 04 May (spot at 1.3570) that while the outlook for GBP is still deemed as bearish, the odds for further weakness to the year-to-date low of 1.3458 are not high. After trading sideways for more than a week, GBP finally perked up and managed to dip below this level (overnight low of 1.3452). Downward momentum has picked up again and this could lead to further weakness to 1.3400 within the next week or so.
AUD/USD: Neutral (since 11 May 18, 0.7525): Prospect for another push lower to 0.7400 has diminished.
AUD recovered most of Tuesday’s decline as it rebounded to hit an overnight high of 0.7524. This level is not from the ‘key resistance’ indicated at 0.7540 yesterday. As highlighted, a break of 0.7540 would indicate that the current mild downward pressure has eased. Until then, another push lower towards the major 0.7400 support is not ruled out just yet but the prospect for such a move has diminished.
USD/JPY: Neutral (since 21 Feb 18, 107.35): Further USD strength to 111.00 is not ruled out. No change in view.
We have held the same view since last Thursday (10 May, spot at 110.75) wherein the immediate upward pressure could lead to a test of the major 110.45/50 resistance. After trading sideways for several days, USD finally managed to move higher and hit an overnight high of 110.45. At this stage, the prospect for a sustained move above 110.45/50 is not high but until there is break of the ‘key support’ at 109.65, we could not rule out further USD strength to 111.00.