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Thomson Reuters
May 10 - 01:24 AM
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - UOB
First appeared on eFXplus on May 10 - 12:00 AM

EUR/USD: 

24-HOUR VIEW: A retest of 1.1250 would not be surprising but prospect for a clear break of 1.1265 is not high for now. After trading quietly for several days, EUR staged a sudden but short-lived surge and hit a high of 1.1251. Despite the rapid pull-back from the high, the underlying tone remains positive. From here, a retest of 1.1250 would not be surprising but the prospect for a clear break above last week’s 1.1265 top is not high for now. Support is at 1.1200 followed by 1.1185.

1-3 WEEKS VIEW: EUR is expected to trade sideways. Despite the relatively strong gains of +0.25% yesterday (NY close of 1.1220), it is too soon to get ‘excited’ about the potential of a sustained advance in EUR. That said, after yesterday’s price action, the risk has shifted slightly to the upside even though EUR may struggle to break clearly above the top of the expected 1.1110/1.1265 consolidation range at 1.1265. Overall, the underlying tone in EUR has improved slightly and would improve further as long as it can continue to register a higher daily closing. On the downside, a move below 1.1165 would indicate that the current nascent build-up in upward momentum has fizzled out. Looking ahead, if there were a daily closing above 1.1265, it would indicate that EUR is ready to move towards 1.1325.

GBP/USD: 

24-HOUR VIEW: GBP is expected to trade sideways, likely within a 1.2980/1.3060 range. GBP traded sideways yesterday albeit at a narrower range than anticipated. The largely unchanged close in NY (1.3004, -0.02%) suggests GBP is still trading in a consolidation phase. In other words, GBP is expected to continue to trade sideways for now, likely between 1.2980 and 1.3060.

1-3 WEEKS VIEW: GBP has moved into a sideway-trading phase. There is not much to add to the update from yesterday (09 May, spot at 1.3010). As highlighted, GBP has moved into a sideway-trading phase and is expected to trade sideways, likely within a 1.2930/1.3110 range. At this stage, the risk of a break of the bottom of the expected range appears to be a tad higher even though at this stage, the odds for a move below last month’s low near 1.2965 appear to be rather low.

AUD/USD: 

24-HOUR VIEW: AUD is expected to trade sideways to slightly higher, likely within a 0.6975/0.7015 range. We expected AUD to “drift lower” yesterday but were of the view that “a break of 0.6960 appears unlikely”. AUD subsequently touched 0.6965 before rebounding. While downward pressure has waned with the recovery, it is too early to expect a sustained rise. From here, AUD is expected to trade sideways to slightly higher, expected to be within a 0.6975/0.7015 range.

1-3 WEEKS VIEW: Break of 0.6950 would shift focus to 0.6910. There is not much to add as AUD closed largely unchanged in NY (0.6987, -0.03%). The current negative phase in AUD appears to be tiring but only a break of the 0.7060 ‘key resistance’ (no change in level) would indicate that the 0.6960 low registered on Monday (06 May) is short-term bottom. Until then, we continue to hold the view that a “break of 0.6950 would shift focus to 0.6910”.

NZD/USD: 

24-HOUR VIEW: NZD is expected to trade sideways, likely between 0.6565 and 0.6605. NZD traded between 0.6571 and 0.6596, narrower than our expected consolidation range of 0.6555/0.6605. The quiet trading offers no fresh clues and NZD is likely to continue to trade sideways for now. Expected range for today, 0.6565/0.6605.

1-3 WEEKS VIEW: NZD is expected to test the rising weekly trend-line at 0.6500. No change in view, see reproduced update below. There is not much to add to the update from yesterday (08 May, spot at 0.6560). As highlighted, NZD would likely depreciate further in the coming days and the focus is at the rising weekly trend-line connecting the 2015 and 2018 lows (trend-line is currently sitting at 0.6500). This is a solid level and may not yield so easily. Overall, NZD is expected to remain under pressure unless it can reclaim the 0.6630 ‘key resistance’ (no change in level).

USD/JPY: 

24-HOUR VIEW: Any weakness in USD would likely be at a slower pace and limited to a test of 109.35. We expected USD to trade “sideways to slightly lower” but it plummeted to a low of 109.46 before recovering. Despite the bounce, the underlying tone remains weak. That said, in view of the oversold conditions, any weakness would likely be at a slower pace and limited to a test of 109.35 (next support is at 109.00). Resistance is at 110.00 but only a move above 110.20 would indicate the current weakness in USD has stabilized.

1-3 WEEKS VIEW: Next support levels at 109.30, 109.00 may not come into the picture so soon. We indicated on Monday (06 May, spot at 110.65) that USD has “moved into a negative phase and the focus is at the March low of 109.70”. While we correctly anticipated the direction of the movement in USD, the ease of which it cracked 109.70 was not exactly expected (USD dropped to 109.46 yesterday). The negative phase is still clearly intact and the next level to focus on is at 109.35 followed by 109.00. In view of the oversold shorter-term conditions, these levels may not come into the picture so soon. On the upside, only a break of the 110.60 ‘key resistance’ (level was at 110.90) would indicate that the negative phase has ended.

Source:
UOB Research/Market Commentary

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