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Thomson Reuters
May 13 - 01:24 AM
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - UOB
First appeared on eFXplus on May 13 - 12:00 AM

EUR/USD: 

24-HOUR VIEW: EUR is expected to trade sideways, likely within a 1.1215/1.1265 range. We highlighted last Friday “a retest of 1.1250 would not be surprising but prospect for a clear break of 1.1265 is not high for now”. In line with expectation, EUR touched 1.1253 before easing off. While upward pressure has waned, it is too soon to expect a significant pullback. EUR is more likely to trade sideways at these higher levels, expected to be within 1.1215 and 1.1265.

1-3 WEEKS VIEW: EUR is expected to trade sideways but risk of a break of 1.1265 has increased. EUR touched 1.1253 last Friday before easing off to end the day slightly higher (NY close of 1.1233, +0.11%). The price action offers no fresh clue and we continue to hold the same view from earlier this month (see update of 02 May, spot at 1.1200) wherein EUR is expected “to trade sideways”. That said, as highlighted last Friday (10 May), the underlying tone has improved slightly and the risk for a break above the top of the expected 1.1110/1.1265 range has increased. Overall, the build-up in momentum is expected to gain steam if EUR can continue to register a higher daily closing from here. On the downside, a move below 1.1185 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 1.2970/1.3055 range. GBP traded between 1.2992 and 1.3047, narrower than our expected sideway trading range of 1.2980/1.3060. The largely unchanged daily closing in NY of 1.3000 (-0.03%) offers no fresh clue. Momentum indicators are still mostly neutral which suggest GBP is likely to continue to trade sideways for now. Expected range for today, 1.2970/1.3055.

1-3 WEEKS VIEW: GBP has moved into a sideway-trading phase. No change in view from last Friday, see reproduced update below. 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: Underlying tone has weakened somewhat but any down-move in AUD is likely limited to a test of 0.6970. AUD traded sideways between 0.6978 and 0.7019 last Friday, relatively close to our expected range of 0.6975/0.7015. The underlying tone appears to have weakened somewhat even though any down-move is likely limited to a test of 0.6970 (next support at 0.6950 is likely out of reach for now). Resistance is at 0.7010 followed by 0.7030.

1-3 WEEKS VIEW: Break of 0.6950 would shift focus to 0.6910. After dropping to 0.6960 last Monday (06 May), AUD has not been able to make much headway on the downside as it subsequently traded sideways for the remaining of last week. The ‘negative phase’ that started late last month appears to be tiring but the current short-term sideway trading phase is likely to be resolved by a ‘downside break’. In other words, we continue to hold the same view as last Monday (06 May, spot at 0.6980) wherein a “break of 0.6950 would shift focus to 0.6910”. That said, in order reinvigorate the flagging downward momentum, AUD has to move and stay below 0.6970 within these few days or the prospect for a break of 0.6950 would diminish further. Conversely, if AUD were to move above the 0.7060 ‘key resistance’ (no change in level), it would indicate that 0.6960 is a short-term bottom (AUD would then likely to consolidate and trade sideways for a period).

NZD/USD: 

24-HOUR VIEW: NZD is expected to trade sideways, likely between 0.6570 and 0.6610. NZD traded sideways as expected even though at a narrower range than anticipated. The current movement is still viewed as part of a consolidation phase. In other words, NZD is expected to continue to trade sideways for now, likely between 0.6570 and 0.6610.

1-3 WEEKS VIEW: NZD is expected to test the rising weekly trend-line at 0.6500. After crashing to a low of 0.6525 last Wednesday (08 May), NZD has traded in a relatively subdued manner. The quiet price action has dented the downward momentum and the prospect for further NZD weakness has diminished. However, as long as the 0.6630 ‘key resistance’ is intact (no change in level of ‘key resistance), we continue to see chance for NZD to “test the rising weekly trend-line at 0.6500”. That said, NZD has to move and stay below 0.6570 within these few days or the downside risk would diminish further.

USD/JPY: 

24-HOUR VIEW: USD is expected to trade sideways, likely within a 109.40/110.10. Expectation for USD to “test 109.35” did not materialize as rebounded after touching 109.46. The recovery lacks momentum and a sustained rise from here is not expected. USD is more likely to trade sideways at these lower levels, likely within a 109.40/110.10 range.

1-3 WEEKS VIEW: Next support levels at 109.30, 109.00 may not come into the picture so soon. While the negative phase in USD that started last on Monday (06 May, spot at 110.65) is still intact, the sharp and rapid decline appears running ahead of itself. Oversold short-term conditions suggest that USD could trade sideways for a few days first. In other words, the next support levels at 109.30, 109.00 may not come into the picture so soon. On the upside, the ‘key resistance’ level has moved lower to 110.40 from 110.60. Only a break of this level would indicate that the current negative phase has ended. On a shorter-term basis, USD should ideally hold below 110.10.

Source:
UOB Research/Market Commentary

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