EUR/USD: Bullish (since 19 Jul 17, 1.1550): 1.2000 is the next target but could be a bridge too far.

We indicated yesterday that unless EUR can ‘punch’ above 1.1845 within these few days, the odds for further upward extension would diminish. EUR not only took out this level but also the strong resistances at 1.1875 and 1.1900 (overnight high of 1.1909). Despite the swift pull-back from the high, the bullish phase that started on 19 Jul is still intact. The next level to focus on is technically at 1.2000 but based on the current extreme over-stretched conditions, this level could be a bridge too far. On the downside, support is at 1.1810 followed by 1.1770.

GBP/USD: Bullish (since 01 Aug 17, 1.3195): Immediate target of 1.3270.

There is hardly any significant pull-back as GBP continues to advance and hit a fresh high of 1.3250. The bullish target of 1.3270 that was indicated two days ago (01 Aug) appears to be within reach. A break of this level would shift the focus to 1.3345. Positioning wise, the entry level suggested at 1.3140/45 two days is not met and it appears that the buying opportunity has been missed.

AUD/USD: Neutral (since 27 Jul 27, 0.7995): In 0.7870/0.8040 range. No change in view, see update from yesterday below.

AUD tried but failed to move above 0.8050 yesterday (high of 0.8043). As highlighted, only a NY closing above 0.8050 would indicate that AUD has moved into a bullish phase again. The sharp and rapid pull-back from the high coupled with the break of the strong shortterm support at 0.7960 suggests very slim odds for a sustained move above 0.8050 in the next few days. In other words, the neutral phase that started last Thursday is still in place but AUD is more likely to trade sideways, likely within a broad 0.7870/0.8040 range.

NZD/USD: Neutral (since 02 Aug 17, 0.7430): NZD under pressure unless can reclaim 0.7475.

We just shifted to a neutral stance on NZD yesterday and there is no change to the view. As highlighted, the sharp plunge early yesterday has shifted the pressure to the downside even though 0.7375 is expected to offer solid support (this level is followed by another strong support at 0.7345, the high in June). Overall, this pair is expected to stay under pressure in the next few days unless it can reclaim 0.7475 (key resistance was previously at 0.7500).

USD/JPY: Bearish (since 31 Jul 17, 110.60):  Immediate target of 109.50.

The recovery from the 109.91 low seen two days ago (01 Aug) is more resilient than expected. While this has dented the downward momentum, only a clear break above 111.20 (stop-loss level unchanged) would indicate that our bearish USD expectation is wrong. Until then, a move towards the 109.50 target is not ruled out just yet even though 109.90 is acting as a rather strong support now.

Source: United Overseas Bank Global Economics & Markets Research

Leave a Comment

Your email address will not be published. Required fields are marked *