EUR/USD: Neutral (since 13 Jul 17, 1.1415): In a broad 1.1320/1.1520 range. No change in view, see update from yesterday below.

While EUR broke above the strong weekly trend-line resistance at 1.1445 on Tuesday, the failure to hold on to its gains coupled with the sharp drop indicates that the shift to a bullish stance yesterday was wrong. We are neutral now and the recent price action looks like the early stages of a ‘rising wedge’ formation but the key support is much further down at 1.1320. In the meanwhile, EUR is expected to continue to trade choppily, likely within a broad 1.1320/1.1520 range.

GBP/USD: Neutral (since 05 Jul 17, 1.2925): In a 1.2800/1.2975 range.

The rebound from the Wednesday (12 Jul) low of 1.2812 is more resilient than expected. While the current price is still holding below the top end of the expected 1.2800/1.2975 sideway trading range, improved upward momentum suggests that a move above 1.2975 would not be surprising. That said, GBP has to move clearly above 1.3000 to indicate that it has moved into a bullish phase again. In the meanwhile, this pair is expected to stay supported in the next few days as long as the key level at 1.2880 is intact.

AUD/USD: Shift to bullish, target a move to the 2016 high of 0.7850. 

While we expected a higher AUD in the past few days, the pace of the up-move and the ease of which the major weekly trend-line resistance at 0.7710/15 was taken out comes as a surprise. From here, a break above the year-to-date high at 0.7750 seems likely and this could lead to a rapid rise to the 2016 high of 0.7850 (with ‘intervening’ resistance at 0.7778). In order to maintain the bullish momentum, a breach of 0.7670 is enough to indicate that the move above the trend-line is a ‘false break’

NZD/USD: Neutral (since 13 Jul 17, 0.7250): Bullish if NY closing is above 0.7370.

The strong rally that carried NZD to a high of 0.7369 was clearly unexpected especially so soon after the sharp drop to a low of 0.7202 on Tuesday (11 Jul). While upward momentum has picked up strongly, we are wary of further choppy swings and prefer to wait for a daily closing above 0.7370 before turning bullish. The odds for such for a move appear to be quite high and would continue to improve over the next few days as long as the key support at 0.7260 is intact. In the event of a bullish shift, the immediate target would be at the 2016 high of 0.7485.

USD/JPY: Neutral (since 13 Jul 17, 113.25): In a 112.00/114.20 range. There is not much to add to the update from yesterday (reproduced below).

While we warned of the increased risk of an interim top yesterday, the pace and extent of the USD decline was unexpected (the 0.69% decline is the largest single-day drop in more than a month). The bullish phase that started on 20 Jun (spot at 111.65) has ended with the break of 113.40 (low has been 112.90). USD has likely just moved into a consolidation phase and is expected to trade within a broad 112.00/114.20 range for now even though the immediate bias is tilted to the downside.

Source: United Overseas Bank Global Economics & Markets Research

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