FX Technical Strategy-UOB

EUR/USD: Neutral: In a 1.0580/1.0750 range.

EUR registered an ‘inside day bar’ last Friday but closed near the low of the day. While there is no change to the current neutral view, the weak daily closing suggest that the short-term bias is tilted to the downside. A move below the expected 1.0580/1.0750 consolidation range would not be surprising but based on the current lackluster downward momentum; any decline is expected to struggle to move below last week’s low near 1.0530. Resistance is at 1.0670 and the top-end of the expected consolidation range at 1.0750 is likely strong enough to cap any EUR strength, at least for the next several days.

GBPUSD: Neutral: Early and tentative signs of a break lower.

While the neutral phase that started early this month is still in place, there are early and tentative signs that the recent consolidation could be resolved to the downside (last Friday’s close is the weakest in one month). That said, GBP has to break clearly below 1.2350 to indicate that a move towards 1.2250 (and likely below) has started. Overall, the immediate downward pressure is expected to increase further unless GBP can reclaim that very strong resistance at 1.2530.

AUDUSD: Bullish: To take half profit at 0.7775/80.

AUD dropped to a low of 0.7656 last Friday, not much higher than the stop-loss for our bullish view at 0.7640. The odds for another leg higher to 0.7775/80 have diminished further but only a break of 0.7640 would indicate that a temporary top is in place. In the meanwhile, those are who are long should continue to look to take half profit at 0.7775/80 even though the prosfect for such a move is not high.

NZDUSD: Neutral: In a0.7150/0.7320 range.

There is not much to add as NZD traded in a relatively narrow range last Friday. That said, the immediate bias has shifted slightly to the downside and a move below the expected 0.7150/0.7320 consolidation range would not be surprising (even though last week’s low at 0.7135 is expected to offer solid support).

USDJPY: Neutral: In a 112.30/114.50 range

The up-move from the 111.55/66 low last week has likely found a temporary top at 114.95 two days ago. From here, USD is deemed to have moved into a consolidation phase and is expected to trade between 112.30 and 114.50.

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