EUR/USD: Neutral (since 14 May 18, 1.1950): Immediate pressure is on the downside.
We shifted from a bearish to a neutral stance on Monday (14 May, spot at 1.1950) and held the view that EUR has moved into a 1.1850/1.2050 consolidation range. The sharp and rapid decline yesterday that took out last week’s 1.1821 low was not exactly expected. However, we believe it is premature to expect a resumption of the recent bearish phase even though further weakness to 1.1750 would not be surprising. This support is followed by another strong level at 1.1715, the low in December last year. To put it another, while the near-term outlook is negative, the current weakness does not appear to have much ‘leg’ to move below 1.1715. Overall, only a move back above the ‘key resistance’ at 1.1940 would indicate that the current downward pressure has eased.
GBP/USD: Bearish (since 01 May 18, 1.3765): Downward momentum has picked up again, expect further weakness to 1.3400.
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): Improved downward momentum could lead to a probe of 0.7400.
AUD touched an overnight low of 0.7448, just above the bottom of our expected 0.7440/0.7600 consolidation range. While there is no change to our neutral view, downward momentum has picked up and this could lead to a probe of the major 0.7400 support. At this stage, we do not anticipate a sustained move below this level. Only a move back above the ‘key resistance’ at 0.7540 would indicate that the current mild downward pressure has eased.
NZD/USD: Bearish (since 02 May 18, 0.7005): Bearish phase has room to extend further to 0.6800.
While we highlighted yesterday (15 May, spot 0.6915) that “a move below 0.6900 seems likely now”, we added “0.6850 could be out of reach”. The subsequent sharp decline that hit an overnight low of 0.6855 came as a surprise and indicates that the bearish phase that started earlier this month (02 May, spot at 0.7005) has scope to extend further to 0.6800.
USD/JPY: Neutral (since 21 Feb 18, 107.35): Further USD strength to 111.00 is not ruled out.
Neutral (since 21 Feb 18, 107.35): Further USD strength to 111.00 is not ruled out. 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.