EUR/USD: Neutral: In a 1.0635/1.0780 range.
While EUR hit the ‘rebound target’ of 1.0770 as expected (high of 1.0777), the sharp and swift pull-back from the top came as a surprise. Upward momentum has been dented and this pair has likely moved into a consolidation phase and is expected to trade within a 1.0635/1.0780 range. Looking further ahead, the bias is tilted to the upside but 1.0775/80 is acting as a very strong resistance and only a clear break of this level would indicate a move towards 1.0825 has started.
GBP/USD: Bullish: Overbought but room for extension to 1.2950.
While the consolidation over the past couple of days has dented the upward momentum, the current overbought rally appears to have room to extend higher towards 1.2950. Only a move back below 1.2660 would indicate that a temporary top is in place. That said, GBP has to move higher within the next 1 to 2 days as a prolonged consolidation would lead to further loss in momentum.
AUD/USD: Neutral: Increasing risk of further weakness towards 0.7400.
Despite the sharp bounce yesterday, we continue to see increasing downside risk for a break below last week’s low near 0.7475. A daily closing below this level would indicate the start of a sustained down-move towards 0.7400. Only a move above 0.7565/70 would indicate that the downside risk has eased.
NZD/USD: Neutral: In a 0.6940/0.7060 range.
We warned of the low odds for further NZD strength and the weak daily closing yesterday is enough to indicate that a short-term top is in place at 0.7050/55 (high over the past two days). NZD has likely moved into a consolidation phase and is expected to trade sideways between 0.6940 and 0.7060 for now.
USD/JPY: Shift from bearish to neutral: Short-term low in place, in a 108.20/109.80 range.
We highlighted yesterday that “downward momentum continues to wane and the risk of short-term low has increased considerably”. The break back above 109.30 (overnight high of 109.48) indicates that the 108.11 low seen on Monday (17/4) is a short-term low. That said, it is too early to expect a sustained rebound and USD is more likely to trade sideways between 108.20 and 109.80 for now even though the immediate bias is for a probe higher towards the top of the expected consolidation range at 109.80. A break above this level would suggest a stronger rebound towards 111.55/60 has started.