EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR is caught in a consolidation range for now.
There is not much to add to the update from yesterday (03 Dec, spot at 1.1330). As highlighted, the recent upward pressure has eased and EUR is likely caught in a consolidation range for now. In other words, we expect EUR to trade sideways, likely within a 1.1265/1.1400 range. Looking further ahead, the risk for a higher EUR appears to be greater but even if there is a pop above 1.1400, EUR is expected to find it difficult to break above the next resistance 1.1440.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP could move below the year-to-date low of 1.2662.
We lowered the ‘key resistance’ from 1.2850 to 1.2820 yesterday and it appears we have underestimated the short-term volatility as GBP popped briefly to 1.2824 before plummeting to a low of 1.2697. The price action continues to suggest GBP “could move below the yearto-date low of 1.2662”. Despite the overall negative indications, the lack of a significant push lower below 1.2662 is surprising. For now, we will hold on to our view and only a move above yesterday’s peak near 1.2825 would indicate that a short-term bottom is in place.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is expected to move higher to 0.7410. No change in view.
We have held the same view since last Thursday (29 Nov, spot at 0.7305) wherein the “the prospect of 0.7199 as a short-term bottom is quite high). We added, “confirmation of a short-term bottom is only upon a clear break above 0.7335/40”. AUD blast past this level early this morning as US/China trade war truce sent it rocketing (AUD gapped higher as it opened at 0.7370). As highlighted last week, a break of 0.7335/40 would indicate that AUD is “ready to tackle, 0.7380, 0.7410 in the coming weeks”. In other words, the current price action is in line with our expectation and from here, we are expecting AUD to move to 0.7410. The next resistance above this level is at 0.7455. On the downside, the ‘key support’ has moved higher to 0.7280 from 0.7240. On a short-term note, 0.7330 is already a strong support level.
NZD/USD: Shift from neutral to BULLISH*: Target a move to 0.7000.
NZD closed above the key 0.6920 level (NY close of 0.6928) and as highlighted yesterday (03 Dec, spot at 0.6905), this would shift the outlook for NZD to bullish. From here, the immediate target is at 0.7000. On the downside, the ‘key support’ at 0.6830 is acting a ‘stoploss’ now. That said, short-term indicators are at overstretched level and it may take up to a couple of weeks before NZD could hit 0.7000.
USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is expected to trade sideways for now. No change in view.
We expected USD to “edge lower” since last Thursday (29 Nov, spot at 113.55) but it traded in a quiet manner and closed at about the same level on Thursday (113.47) and Friday (113.46). The mild downward momentum has eased and USD is still likely caught in a consolidation phase for now. In other words, we expect USD to trade sideways from here, albeit at a slightly higher range of 112.90/114.20 (from 112.70/114.00 previously).
*Recorded in eFXplus Orders