EUR/USD: Bullish: Diminished odds for a break above 1.1000. [No change in view, see update from yesterday below]
EUR traded in a narrow range of less than 50 pips yesterday (between 1.0886 and 1.0933). While we continue to hold a bullish view (since last Wednesday, 26 Apr, spot at 1.0905), we are aware of the rapidly waning upward momentum. As indicated yesterday, EUR has to break above 1.1000 sometimes this week or the risk of a short-term top would increase further.
GBP/USD: Shift from bullish to neutral: In a 1.2750/1.2950 range.
While the stop-loss for the bullish phase that started 2 weeks ago is still intact at 1.2850, the weak daily closing yesterday is enough to indicate that the 1.2965 peak seen last Friday is a short-term top. The current price action is viewed as the start of a consolidation phase even though the immediate bias is for a probe lower towards the bottom of the expected 1.2750/1.2950 sideways trading range.
AUD/USD: Shift from neutral to bearish: Overextended but room for extension to 0.7370, possibly 0.7330.
After rebounding strongly to a high of 0.7556 on Tuesday (02 Apr), the sudden and sharp plunge in AUD yesterday came as a surprise. While the decline appears to be overextended, the rapid improvement in momentum suggests that there is room for further extension towards 0.7370 (next support at 0.7330). Overall, AUD is expected to stay under pressure in the coming days unless it can reclaim 0.7485 (key resistance is higher up near 0.7550).
USD/JPY: Neutral: Immediate downward pressure towards 0.6845/50.
Despite the strong bounce early yesterday, we held the view that “the odds for further extension to the key resistance at 0.7010 are not high”. However, the sharp and swift decline from a high of 0.6969 was unexpected. Vastly improved downward momentum suggests that there is room for the current weakness to extend lower to 0.6845/50 (next support at 0.6800). All in, the current downward pressure is expected to grow unless NZD can reclaim 0.6945.
USD/JPY: Bullish: Above 112.90 shift focus to 113.50.
USD is currently holding just below the revised target indicated at 112.90 yesterday. Based on the current strong momentum, a break above this major level would not be surprising and would shift the focus to 113.50 next. USD is currently holding just below the revised target indicated at 112.90 yesterday. Based on the current strong momentum, a break above this major level would not be surprising and would shift the focus to 113.50 next. Overall, the bullish phase that started last Thursday is intact until 112.20 is taken out.