EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR strength has scope to test the major 1.1620 level.
While the ‘key support’ indicated at 1.1440 is still intact (low of 1.1455 last Friday), the weak daily closing in NY (1.1468, -0.26%) suggests that our expectation for EUR to test the major 1.1620 resistance level is likely wrong. However, we would hold on to the view for now even though a breach of the 1.1440 support would not be surprising (see 24-hour view above). In order to revive the current flagging momentum, EUR has to move and stay above 1.1520 within these 1 to 2 days. Looking ahead, a move below 1.1440 would indicate that EUR is still caught within a broad sideway trading range and is not ready to advance just yet.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Scope for recovery in GBP to extend to 1.2950.
We have the same view since last Monday (07 Jan, spot at 1.2725) that while there is a slight upward bias, “any GBP strength is viewed as part of a broad 1.2600/1.2850 range”. After trading sideways for several days, GBP took out 1.2850 last Friday and hit 1.2866 before ending the day on a firm note at 1.2838 (+0.66%). Despite the relatively positive price action, we are not convinced that the current GBP strength can be sustained. That said, there is scope for the recovery to extend to 1.2950. Only a clear break above 1.2950 would suggest that GBP is ready for a sustained up-move. In the meanwhile, GBP is expected to stay underpinned in the coming days until a break of the ‘key support’ at 1.2750.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Recovery in AUD has room to extend to 0.7270.
While we noted in recent updates that the “outlook for AUD is slightly positive”, the ease of which AUD took out 0.7205 and the subsequent rise to 0.7235 last Friday came as a surprise. The price action suggests the recovery in AUD has room to extend further but at this stage, the prospect for a clear and sustained break above 0.7270 is not high. All in, we expected AUD to stay underpinned as long as 0.7120 is intact (level was at 0.7055 previously). From a shorter-term perspective, overbought conditions could lead to a few days of consolidation first before a move to 0.7270 can be expected.
NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD to consolidate at these higher levels.
We have held the same view since last Monday (07 Jan, spot at 0.6735) wherein the “strong recovery in NZD has scope to extend higher” but “the prospect for a sustained move above 0.6830 is not high”. NZD touched 0.6843 last Friday before ending the day on a strong note (NY close of 0.6837, +0.82%). While the underlying tone has improved, we are still of the view that the prospect for a sustained move above 0.6830 is not high. Only an unlikely NY closing above 0.6850 would indicate that NZD is ready to challenge the major 0.6900 level. Meanwhile, NZD could consolidate and trade sideways at these higher levels for several days
USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is expected to trade sideways for now.
USD traded within a tight range last Friday and the price action offers no fresh clues. In other words, there is no change to our view and we continue to expect USD to trade sideways for now, likely between 107.00 and 109.00.