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Thomson Reuters
Jun 25 - 01:24 AM
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - UOB
First appeared on eFXplus on Jun 25 - 12:00 AM

EUR/USD: 

24-HOUR VIEW EUR could continue to edge higher but the strong 1.1450 resistance is still likely out of reach. Yesterday, we held the view that the rally in EUR “has scope to extend above 1.1400 but for today, the major 1.1450 is not expected to come into the picture”. While EUR extended its advance as expected, it only touched 1.1403 before ending the day near the high (NY close of 1.1396). The rally in EUR is deep in overbought territory now but with no sign of weakness just yet, EUR could continue to edge higher even though 1.1450 is still likely out of reach (there is another resistance at 1.1430). Support is at 1.1375 followed by 1.1350.

1-3 WEEKS VIEW Scope for rally to extend further but EUR is expected to face solid resistance at 1.1450. EUR edged above 1.1400 yesterday the first time in about 3 months as it touched an overnight high of 1.1403. The price action is not surprising as our view (see update from yesterday, 24 Jun) remain unchanged wherein there is scope for the rally in EUR to extend further but solid resistance is expected near 1.1450. All in, the current advance has gathered more momentum and the risk is still firmly on the upside. Only a move below the 1.1320 ‘key support’ (level was at 1.1275 yesterday) would indicate that the current ‘positive phase’ has run its course.

GBP/USD: 

24-HOUR VIEW GBP is expected to trade sideways, likely between 1.2700 and 1.2770. We expected GBP to “move above the month-to-date high of 1.2763” yesterday but were of the view the next resistance at “1.2800 is unlikely to yield so easily”. GBP subsequently touched 1.2766 before staging a relatively rapid pull-back. Upward momentum has eased considerably and GBP has likely moved into a consolidation phase. In other words, GBP is expected to trade sideways for today, likely between 1.2700 and 1.2770.

1-3 WEEKS VIEW A NY closing above 1.2763 would indicate start of a ‘positive phase’. We detected the uptick in momentum since last Thursday (20 Jun, spot at 1.2655) and held the view that GBP “could test the month-todate high of 1.2763”. In that context, the rise in GBP that touched an overnight high of 1.2766 was not surprising. However, upward momentum has not improved all that much and we continue to hold the view that only a NY closing above 1.2763 would indicate the start of a ‘positive phase’ in GBP (see update from yesterday, 24 Jun). For now, the prospect for such a scenario is not that high but it would continue to improve as long as GBP does not move below 1.2650. Looking ahead, if GBP were to close above 1.2763, it could lead to an advance towards 1.2850.

AUD/USD:

24-HOUR VIEW Improved momentum suggests a move above 0.6980 would not be surprising but 0.7000 is unlikely to break. Our view for AUD yesterday was for it to “move higher but 0.6980 could be just out of reach for now”. AUD subsequently rose to 0.6969 before ending the day on a firm note at 0.6962. In view of the improved momentum, a move above 0.6980 would not be surprising but the prospect for a break of the next resistance at 0.7000 is not high. On the downside, 0.6930 is likely strong enough to hold for today (minor support at 0.6950).

1-3 WEEKS VIEW AUD has moved into a sideway-trading phase, likely to probe the top of the range first. The price action in AUD is line with our narrative from last Friday (21 Jun, spot at 0.6920) wherein AUD has “moved into a sidewaytrading phase” but the improved underlying tone suggests it could “probe the top of the expected 0.6860/0.6980 range first”. The 0.6980 level appears to be within reach as AUD touched 0.6969 during NY hours. Despite the relatively strong gains, upward momentum remains lackluster and the prospect for a sustained rise above 0.6980 is still not high. That said, the risk is tilted to the upside as long as AUD does not move below 0.6860. On a shorter-term note, 0.6900 is already is strong level. Looking forward, if AUD can move and stay above 0.6980, it would suggest the month-to-date peak at 0.7022 would come under threat.

NZD/USD: 

24-HOUR VIEW NZD could test 0.6645 first but a sustained advance above this level is not expected. We highlighted yesterday NZD “could probe the 0.6620 resistance but any gain is viewed as part of a 0.6570/0.6620 trading range”. The subsequent advance was a tad stronger than anticipated as NZD rose to 0.6626 before settling on a firm note at 0.6619. From here, the improved underlying tone suggests NZD could test 0.6645 first but for today, a sustained advance above this level is not expected (the next resistance is some distance away at 0.6680). On the downside, 0.6590 is likely strong enough to hold any intraday weakness (minor support is at 0.6605).

1-3 WEEKS VIEW NZD has moved into a ‘positive phase’ with eyes on 0.6680. We detected the pick-up in momentum last Thursday (20 Jun, spot at 0.6555) and held the view that “the recovery in NZD could test 0.6620”. Upward momentum has improved further as NZD touched 0.6626 yesterday (24 Jun) before closing on a firm note at 0.6619 (+0.44%). From here, NZD is deemed to have moved into a ‘positive phase’ with eyes on the month-to-date peak near 0.6680. On the downside, the ‘key support’ is at 0.6570 (was previously a ‘strong support’ at 0.6540).

USD/JPY: 

24-HOUR VIEW USD could continue to trade sideways, likely within a 107.05/107.55 range. Expectation for sideway trading yesterday was not wrong as USD had a quiet session and traded within a narrow range of 107.23/107.53. Momentum indicators are still mostly ‘neutral’ and USD is expected to continue to trade sideways, likely between 107.05 and 107.55.

1-3 WEEKS VIEW Break of 107.00 would shift focus to 106.60. No change in view from yesterday, see reproduced update below.

USD tried but failed to break the 107.00 level that was first highlighted last Thursday (20 Jun, spot at 107.70). The price action was not exactly surprising as deeply oversold shorter-term conditions suggest USD could consolidate and trade sideways for 1 to 2 days. As long as the ‘key resistance’ at 108.00 is intact (no change in level from last Friday), the current ‘negative phase’ that started 3 weeks ago (03 Jun, spot at 108.30) appears to have legs to extend lower. From here, a break of 107.00 would indicate that USD is ready to tackle the next support at 106.60.

Source:
UOB Research/Market Commentary

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