FOREX Tech Targets

EUR/USD: Neutral (since 05 Mar 18, 1.2335): Shift to bearish if NY close is below 1.2090.

We highlighted yesterday (26 Apr, spot at 1.2170) that “a clear break of 1.2153 would suggest that EUR is ready for a much deeper down-move in the weeks ahead”. EUR not only cracked this level but also managed to test the next major support near 1.2090 (note that 1.2092 was the high in 2017). The odds for a shift to a bearish phase have increased considerably but we prefer to wait for a daily closing below 1.2090. A shift to a bearish phase would have an immediate target of 1.1960. Looking back, while we first indicated that the “immediate pressure has shifted to the downside” on Monday, the decline since then has been more ‘impulsive’ than expected. From here, a clear break of 1.2090 would suggest that the 1.2555 high seen in February could turn out to be a significant mid to long-term top. In the meanwhile, we continue to expect EUR to stay under pressure unless it can reclaim the ‘key resistance’ that is currently at 1.2245 (level was previously at 1.2270).

GBP/USD: Neutral (since 07 Mar 18, 1.3895): Scope for GBP to grind lower to 1.3850.

The 1.3900 level that was first highlighted earlier this week was finally ‘tested’ as GBP touched an overnight low of 1.3895. Downward momentum is still not strong but with no sign of stabilization just yet, we see scope for GBP to grind lower to 1.3850 (next support is at 1.3800). Only a break of the ‘key resistance’ at 1.4020 (level was at 1.4040 yesterday) would indicate that the current weakness has stabilized.

AUD/USD: Neutral (since 22 Mar 18, 0.7770): Further weakness not ruled out but 0.7500 is likely out of reach. No change in view.We noted yesterday that “there is no sign of stabilization just yet” and “we have to contend with further weakness to 0.7550”. AUD subsequently hit a low of 0.7553 before staging a mild recovery. While further weakness is not ruled out, the combination of oversold conditions and waning momentum suggest that the odds for a sustained move below 0.7550 are not high. The next support below 0.7550 is at 0.7500, the low in December last year. At this stage, it appears that AUD would likely make a short-term low ahead of this major support. To put it another way, 0.7500 is likely out of reach this time round. Resistance is at 0.7605 but only a break of 0.7650 (‘key resistance’ previously at 0.7690) would indicate that a short-term low is in place.

NZD/USD: Neutral (since 05 Feb 18, 0.7280): Further weakness to 0.7035 would not be surprising. No change in view.NZD continues to ‘melt’ and our expectation for 0.7070 to temporarily check the drop in NZD was incorrect (low of 0.7058). Despite being severely oversold, there is still no sign of stabilization yet and further NZD weakness to 0.7035 would not be surprising. However, the next support at 0.7000 could be out of reach. On the upside, resistance is at 0.7110 but only a break of 0.7145 (‘key resistance’ previously at 0.7190) would indicate that the current weakness has stabilized.

USD/JPY: Neutral (since 21 Feb 18, 107.35): Focus is at 110.00 now. No change in view.The 109.30 ‘target’ that was first highlighted on Tuesday (24 Apr, 108.70) was exceeded as USD hit a high of 109.45 during NY hours. As indicated previously, a break of 109.30 would suggest that USD is ready for a move to 110.00. We attach high importance to 110.00 as a clear break of this level would indicate that USD has likely made a significant low at 104.55 last month. In the meanwhile, we continue to expect USD to stay supported and only a break of 108.45 (‘key support’ previously at 108.15) would indicate that a top is in place.

Source:efxdata.com