EUR/USD: Neutral (since 05 Jun 18, 1.1700): EUR is expected to trade sideways.
EUR touched a high of 1.1719 yesterday, just one pip below the ‘key resistance’ at 1.1720. While the ‘key resistance’ is still intact, the relatively strong daily closing in NY (closed at 1.1704, +0.41%) is enough to indicate that the recent mild downward pressure has eased. However, there is no change to the neutral outlook and EUR is expected to trade sideways for now, likely within a broad 1.1620/1.1790 range (we previously expected EUR to dip towards 1.1570).
GBP/USD: Neutral (since 25 Jun, spot at 1.3265): GBP is expected to trade sideways. No change in view.
There is not much to add as GBP traded within a tight 49 pips range last Friday, the narrowest 1-day range in two months. The quiet consolidation offers no fresh clue and we continue to hold a neutral stance and expect GBP to trade sideways from here, likely within a 1.3010/1.3220 range.
AUD/USD: Neutral (since 05 Jul 18, 0.7380): AUD is likely caught in a broad range for now.
AUD traded within a tight 27 pips range yesterday, the narrowest 1-day range so far this year. The quiet consolidation offers no fresh clue and we continue to hold a neutral stance. We previously held the view that the downside is more ‘sticky’ but the recent consolidation within narrow ranges suggests that the major 0.7310 support is unlikely to be challenged anytime soon. Indicators are mostly flat now and this suggests that AUD could continue to trade within the month-to-date range between 0.7310 and 0.7485 for a while more.
NZD/USD: Neutral (since 06 Jul, 0.6795): NZD is expected to trade sideways for now.
Despite the relatively strong recovery yesterday, NZD does not appear to be ready to embark on a sustained directional move. That said, the improved undertone suggests it has moved into a higher trading range of 0.6740/0.6880 instead of the 0.6710/0.6850 expected previously. Looking further out, a clear break of 0.6880 would greatly increase the odds for a move to 0.6930.
USD/JPY: Neutral (since 23 Jul 18, 111.20): Outlook is neutral but a test of the 110.25 month-to-date low seems likely.
USD continues to trade in a quiet manner and registered the narrowest 1-day range so far this year. As highlighted in recent updates, we continue to anticipate USD to test the month-to-date low at 110.25 even though after the muted price action over the past several days, the odds for such a move have diminished. That said, only a break of the ‘key resistance’ at 111.80 would indicate that the current downward pressure has eased (ideally, USD should stay below 111.50 from here).