EUR/USD: Bullish: Break of 1.1000 could lead to acceleration higher.

EUR has tested our patience but finally started to move to hit an overnight high of 1.0987. While the 1.1000 target that was first indicated last Wednesday is not met, the strong surge higher yesterday bodes well for our bullish view. 1.1000 is declining weekly trend-line resistance and a break of this level could lead to acceleration higher especially when there are hardly any significant resistances until 1.1300.

GBP/USD: Neutral: In a 1.2750/1.2950 range.

We just shifted from a bullish to neutral stance yesterday and there is no change to the view. GBP is likely trading in a 1.2750/1.2950 consolidation range and only a clear and sustained break above last week’s 1.2965 peak would shift the outlook to bullish again.

AUD/USD: Bearish: Overextended but room for extension to 0.7370, possibly 0.7330.

We just turned bearish yesterday but are aware of the oversold condition. That said, as long as 0.7485 is not taken out, a push lower towards 0.7370 seems likely. A break of this level would shift the focus to 0.7330.

NZD/USD: Neutral: Pull-back has room to extend further to 0.6800.

While we indicated yesterday that “there is room for the current weakness to extend lower to 0.6845/50”, the rapid decline that hit a low of 0.6840 came as a surprise. Despite the quick recovery from the low, NZD is not out of the woods yet unless it can reclaim 0.6920. Until then, the current pullback could extend further to 0.6800.

USD/JPY: Bullish: Diminished odds for extension to 113.50.

While we noted yesterday that a break of the revised target at 112.90 would shift the focus to 113.50, the rapid pull-back from a high of 113.04 came as a surprise. Upward momentum has been dented and the weak daily closing suggests diminished odds for extension to 113.50. However, only a break below 112.20 would indicate that the current bullish USD phase that started last week has ended.

Source: United Overseas Bank Global Economics & Markets Research

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