EUR/USD: Neutral (since 21 Aug 18, 1.1485): Dip below 1.1300 would not be surprising but break of 1.1265 seems unlikely.
EUR recovered and the bottom of our expected 1.1300/1.1440 consolidation range at 1.1300 remains unchallenged (low of 1.1311). Despite the recovery, the underlying tone remains soft and we continue to see chance for EUR to dip below 1.1300. However, as highlighted yesterday, a break of the next support at 1.1265 seems unlikely.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Downward momentum has waned, GBP is likely to consolidate for now.
While we highlighted since Tuesday (11 Dec, spot at 1.2565) “the next support at 1.2400 may not come so soon”, the strong surge in GBP (on the back of Brexit headlines) that took out the 1.2650 ‘key resistance’ came a surprise. Downward momentum has waned with the strong rebound but it is premature to expect a sustained recovery. GBP is more likely to consolidate and trade sideways for now, likely within a broad 1.2480/1.2800.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is still under pressure but a break of 0.7130 would come as a surprise. No change in view.
AUD traded within a relatively narrow range between 0.7185 and 0.7225 yesterday and registered an ‘inside day’. The price action offers no fresh clue and we continue to hold the view the recent sharp decline in AUD is running ahead of itself. As highlighted in recent updates, while AUD is still under pressure, a break of the major 0.7130 support would come as a surprise. All in, AUD has to reclaim the 0.7270 ‘key resistance’ (no change in level) in order to indicate that the current weak phase has stabilized.
NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD has moved into a consolidation phase.
NZD dipped briefly to 0.6825 yesterday, not far from the bottom of our expected 0.6820/0.6930 consolidation range. The quick rebound from the low reinforces our current view wherein NZD is trading in a consolidation phase for now (same view since last Friday, 07 Dec). Looking further ahead, the weakened underlying tone suggest higher risk of a clear break below 0.6820 but for the next one week or so, we do not expect the late-November low near 0.6755 to come into the picture.
USD/JPY: Neutral (since 09 Oct 18, 113.10): USD has moved into a consolidation phase.
USD traded in a narrow range between 113.13 and 113.51 yesterday before settling little changed at 113.27 (-0.08%). The price action offers no fresh clues and we continue to hold the view that the current movement of USD is part of a consolidation phase (between 112.40 and 113.90).