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Thomson Reuters
Apr 30 - 01:24 AM
Tech Views: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - UOB
First appeared on eFXplus on Apr 30 - 12:00 AM

EUR/USD

24-HOUR VIEW: Recovery in EUR has room to test the strong 1.1210 resistance. Expectation for EUR to trade sideways was incorrect as it rose and hit a high of 1.1190 during late-NY hours before settling on a firm note at 1.1185. While upward momentum has not improved by that much, the recovery in EUR has room to test the strong 1.1210 resistance. For today, a sustained break of this level appears unlikely. On the downside, only a move below 1.1140 would indicate that the current mild upward pressure has eased (minor support is at 1.1160).

1-3 WEEKS VIEW: EUR is still under pressure, next support at 1.1070. EUR closed higher at 1.1185 (+0.33%) yesterday. While the ‘key resistance’ at 1.1210 is still intact, downward pressure is beginning to wane and the prospect for EUR to move the next support at 1.1070 has diminished. However, only a break of 1.1210 would suggest that a short-term bottom is place. Overall, the price action is not exactly surprising as while we have held a negative view in EUR, we noted since last Thursday (25 Apr, spot at 1.1155) that “it is unclear at this stage if the next major support at 1.1070 would come into the picture”

GBP/USD

24-HOUR VIEW: GBP is expected to trade sideways, likely within a 1.2900/1.2960 range. GBP traded sideways between 1.2906 and 1.2946 yesterday, narrower than our expected 1.2890/1.2950 range. The quiet price action offers no fresh clues and GBP is expected to continue to trade sideways for now. Expected range for today; 1.2900/1.2960.

1-3 WEEKS VIEW: GBP remains under pressure but Feb’s low of 1.2773 may be out of reach. There is not much to add as GBP edged up and closed slightly higher for the day (NY close of 1.2932, +0.15%). Downward momentum has waned further and the 1.2773 low in February still appears to be “out of reach”. However, only a break of the 1.2970 ‘key resistance’ (no change level) would indicate that the current downward pressure has eased. Looking ahead, a break of 1.2970 would not signal a major reversal but instead would indicate that GBP has moved into a sideway-trading phase.

AUD/USD:

24-HOUR VIEW: AUD could edge above 0.7070 but the next resistance at 0.7100 is not expected to come into the picture. We expected AUD to “drift higher and test the strong 0.7070 level” yesterday. However, it only touched 0.7061 before trading mostly sideways. The underlying tone still appears to be on the firm side and AUD could edge above the 0.7070 level. That said, the next resistance at 0.7100 is not expected to come into the picture. Support is at 0.7040 followed by 0.7020.

1-3 WEEKS VIEW: A NY close below 0.7005 would open up the way for AUD to move to 0.6950. No change in view from yesterday, see reproduced update below. AUD staged a relatively robust rebound last Friday and touched 0.7062 before ending the day on a firm note at 0.7035 (+0.27%). While we have been holding a ‘negative’ view on AUD since early last week, we noted that only “a NY close below 0.7005 would open up the way for AUD to move to 0.6950”. AUD dropped to 0.6988 on Thursday (14 Apr) but it rebounded and did not close below 0.7005. This coupled with the strong bounce on Friday indicates downward momentum has waned. However, confirmation of a short-term bottom is only upon a move above 0.7100. In order to revive the current flagging momentum, AUD has to move and stay below 0.7020 within these few days or the risk of a short-term bottom would increase quickly

NZD/USD:

24-HOUR VIEW: NZD is expected to trade sideways, likely within a 0.6650/0.6685 range. In line with expectation, NZD consolidated and traded sideways yesterday, albeit at a narrower range than anticipated. The consolidation appears to be on-going and NZD is expected to continue to trade sideways for now, albeit at a slightly higher range of 0.6650/0.6685.

1-3 WEEKS VIEW: Short-term bottom in place, NZD has likely moved into a consolidation phase. No change in view from yesterday, see reproduced update below. The month-long negative phase in NZD finally ended as it edged above the 0.6680 ‘key resistance’ last Friday (high of 0.6681). The piece action was not exactly as unexpected as we indicated on Thursday (25 Apr, spot at 0.6595) that “the current decline is deep in oversold territory now and it is unclear at this stage whether NZD could extend lower to 0.6485”. To put it another way, last Thursday 0.6581 low is deemed as a short-term bottom. That said, after the month-long decline, it is too early to expect a major reversal. From here, NZD has likely moved into a consolidation phase and is expected to trade sideways to slightly higher. Expected range for the next couple of weeks; 0.6610/0.6730.

USD/JPY

24-HOUR VIEW: USD is expected to trade sideways, likely within a 111.45/111.85 range. Expectation for USD to drift lower was incorrect as it rebounded to 111.89 before easing off quickly. The price action is viewed as part of a consolidation phase. In other words, USD is expected to trade sideways for today, likely within a 111.45/111.85 range.

1-3 WEEKS VIEW: USD has likely moved into a consolidation phase. No change in view from yesterday, see reproduced update below. USD traded within an ‘inside day’ last Friday (26 Apr) and ended the day little changed at 111.58 (-0.03%). We continue to hold the same view as highlighted earlier on Friday wherein “USD has likely moved into a consolidation phase”. In other words, USD is expected to trade sideways for the next couple of weeks, likely within a broad 111.00/112.30 range.

Source:
UOB Research/Market Commentary

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