Forex Tech Targets

EUR/USD: Shift from neutral to bearish: Room for further weakness in the coming days.

While we have the same view that EUR is expected to “retest the major 1.1500/10 support zone” since 03 Aug (spot at 1.1585), the ‘freefall’ upon the break of this major level last Friday (10 Aug) was not exactly expected. We highlighted on Friday that a clear break of this level “would indicate that a move to the next major support at 1.1365 has started”. EUR hit a low of 1.1368 early this morning during Sydney hours and in view of the impulsive break, there is clearly room for further EUR weakness in the coming days. That said, unless there is further development on the macro front, it is unlikely that EUR can maintain the current pace of decline. Overall, we are upgrading our ‘negative’ outlook to ‘bearish’ and set 1.1285 as the next ‘target’ (this level is followed by another strong support is at 1.1185). On the upside, the ‘stop-loss’ level is at 1.1500 even though ideally, EUR should not move back above 1.1445 within these 1 to 2 days.GBP/USD: Bearish (since 09 Aug, spot at 1.2885): Oversold but further GBP weakness still likely.

The bearish ‘target’ indicated at 1.2775 was exceeded as GBP extended its multi-day decline and hit a low of 1.2723 last Friday (10 Aug). As highlighted, the next support below 1.2775 is at 1.2675 and this revised ‘target’ appears to be within reach sometimes this week. The next support below 1.2675 is another 85 pips lower at 1.2590. All in, while the current decline is in oversold territory, there is no sign of stabilization just yet and further weakness still seems likely. On the upside, the ‘stop-loss’ level is currently at 1.2880 (previously at 1.2940).

AUD/USD: Shift from neutral to bearish: Impulsive break-down suggests that AUD has moved into a bearish phase.

We highlighted on Friday (10 Aug, spot at 0.7375) that there is “room for AUD to drift lower and test 0.7310”. The subsequent price action is anything but a ‘drift’ as AUD sliced through several support levels with ease as it plummeted to a low of 0.7280 (before hitting a fresh low of 0.7251 early this morning). The impulsive break-down suggests that AUD has moved into a bearish phase and the immediate ‘target’ is at 0.7220 with relatively high odds for extension to 0.7160. ‘Stop-loss’ is at 0.7380 even though on a shorter-term note, 0.7350 is already a formidable resistance level.

NZD/USD:  Bearish (since 10 Aug 18, spot at 0.6610): NZD unlikely to maintain pace of decline but scope for extension to 0.6540.

We turned bearish on NZD last Friday (10 Aug, spot at 0.6610) and there is no change to the view. We highlighted that “NZD is unlikely to maintain pace of decline but there is scope for extension to 0.6540”. The low so far has been 0.6558 and we continue to see room for a move to 0.6540. That said, 0.6540/50 is a strong support zone and this level could hold up for a couple of days. On the upside, the ‘stop-loss’ level is currently at 0.6660 (was at 0.6700). Looking ahead, a clear break of 0.6540 would shift the focus to 0.6490.

USD/JPY: Neutral (since 23 Jul 18, 111.20): Negative outlook, USD could test the 109.35 low seen in late June.

While we highlighted last Friday (10 Aug, spot at 111.10) that the “risk of a break of 110.60 has increased”, the subsequent sharp and rapid drop that hit a low of 110.33 early this morning was not exactly expected. Despite the relatively large decline, we believe it is premature to expect the start of a bearish phase. That said, the outlook for USD is deemed as ‘negative’ and we expect USD to edge lower and test the 109.35 low seen in late June. All in, we expect USD to stay under pressure for now unless it can break above the ‘key resistance’ at 111.50.

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Source: efxdata.com