EUR/USD: Bullish: Anticipating a move above 1.1000.

We just turned bullish yesterday and there is no change to the view. Despite the rather sharp overnight pull-back, momentum indicators still look bullish and we continue to anticipate a move above 1.1000.

GBP/USD: Bullish: Overbought but room for extension to 1.2950.

It has been more than a week since the ‘UK election’ rally and GBP is still holding below the peak near 1.2910. Upward momentum is beginning to show signs of slowing and this coupled with the current overbought conditions suggests an increasing risk of a short-term top. In other words, GBP has to break above 1.2910 soon or the risk of a top would continue to grow.

AUD/USD: Shift from neutral to bearish: Room for extension to 0.7400.

The ease of which the 0.7475 support was breached was unexpected. Downward momentum is clearly strong and there is room for the current decline to extend lower even though 0.7400 is a very strong support and may be out of reach (minor support at 0.7435). In order to maintain the current momentum, any short-term rebound should not move back above 0.7540 (0.7515 is already a strong level).

NZD/USD: Shift from neutral to bearish: Target 0.6830.

NZD decline quickly exceeded last month’s 0.6890 low to touch 0.6873. While the outlook is bearish, the late December low of 0.6863 is a major support and acceleration below this level seems unlikely (0.6830 seems like a reasonable target). On the upside, NZD has to move back above 0.6960 to indicate that a short-term low is in place.

USD/JPY: Bullish: Target 112.20.

USD took out 111.55/60 as expected with a high of 111.77. The rapid set-back from the high suggests the start of a short-term consolidation phase that may last for a couple of days. As long as 110.30 is not taken out, we continue to target a move to 112.20.


Source: United Overseas Bank Global Economics & Markets Research

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