FOREX Tech Targets

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Chance for EUR to test the major 1.1630 resistance. No change in view, see update from yesterday (23 Aug) below. The pull-back from 1.1623 was more rapid than expected but only a break of 1.1470 would indicate that the current upward pressure has eased.We shifted to a neutral stance on Tuesday (21 Aug, spot at 1.1485) and held the view the ‘robust’ recovery in EUR could lead to a test of the major 1.1630 resistance. We added, it could “take several days before this level would come into the picture”. However, the pace of the anticipated rebound was faster than expected as EUR hit a high of 1.1623 yesterday (22 Aug) before closing higher for the sixth consecutive days. The rapid recovery is running too fast, too soon but we still see chance for a ‘full-test’ of 1.1630 before a significant pull-back can be expected. The next resistance above 1.1630 is at 1.1670 and at this stage, we apportion a low probability for a clear break above this level. On the downside, the ‘key support’ is currently at 1.1470 (was previously at 1.1420) and only a break of this level would indicate that the current upward pressure has eased.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Still neutral but GBP has moved into a consolidation phase.

We highlighted yesterday (23 Aug, spot at 1.2915) that we “continue to see chance for the 1.2960 level to be tested”. The subsequent sudden and sharp drop of -0.75% (NY close of 1.2815) was clearly unexpected. While the ‘key support’ at 1.2800 is still intact, the weak daily closing is enough to indicate that the recent upward pressure has eased. From here, there is no change to the neutral outlook but GBP is deemed to have moved back into a consolidation phase and is expected to trade sideways, likely within a relatively broad 1.2700/1.2900 range.

AUD/USD: Neutral (since 21 Aug 18, spot at 0.7335): Downside bias but 0.7200 is expected to offer solid support.

AUD plunged by -1.39% yesterday (NY close of 0.7250) and the outsized decline was clearly unexpected. Despite the sharp drop, we are not ready to adopt a bearish stance just yet as we expect last week’s bottom near 0.7200 to offer solid support. Only a clear break of this level would indicate that AUD is ready to tackle the major long-term 0.7145/65 support zone. That said, the near-term bias is on the downside and only a break of 0.7330 (‘key resistance’) would indicate that the current weakness in AUD has stabilized.NZD/USD: Neutral (since 20 Aug 18, 0.6625): NZD has moved into a higher trading range. No change in view.NZD moved above the top of our expected 0.6560/0.6690 consolidation range yesterday (22 Aug) and as it hit a high of 0.6722. Despite the relatively strong up-move over the past few days, we are not convinced that the current strength in NZD is sustainable. The move to 0.6722 is more likely an ‘expansion in range’ and while further NZD strength to 0.6760 is not ruled out, any up-move is viewed as part of a 0.6610/0.6760 consolidation range. In other words, NZD has likely moved into a higher trading range.

USD/JPY: Neutral (since 23 Jul 18, 111.20): Rebound has scope to extend higher but 112.14 is likely out of reach.

The strong surge in USD yesterday was clearly unexpected. While the pressure has shifted quickly to the upside, the recent choppy price action suggests that it is unlikely USD has moved into a bullish phase. That said, the current rebound has scope to extend higher but at this stage, the month-to-date high of 112.14 is likely out of reach (112.00 is already a formidable resistance). On the downside, a dip below 110.50 (‘key support’) would indicate that the current short-term upward pressure has eased.

Source:efxdata.com