FOREX Tech Targets

EUR/USD:

24-HOUR VIEW: EUR is expected to trade sideways, likely within a 1.1150/1.1195 range. EUR traded between 1.1140 and 1.1187 yesterday, wider than our expected range of 1.1150/1.1190. Momentum indicators are showing mixed signals which suggest EUR could continue to trade sideways. Expected range for today, 1.1150/1.1195.

1-3 WEEKS VIEW: EUR is expected to continue to trade sideways. No change in view from yesterday, see reproduced update below. EUR touched a 2-1/2 week low of 1.1148 yesterday (20 May) before recovering to close higher by +0.13% in NY (1.1170). The price action is more or less in line with our expectation from last Wed (15 May, spot at 1.1205) wherein EUR is in a “sideway-trading phase” even though “the immediate bias is tilted to the downside” but “1.1130 is a solid support and is unlikely to yield so easily”. While downward pressure has waned after yesterday’s price action, a break of 1.1130 is not ruled out just yet. Only a move above 1.1210 (‘key resistance’ level was previously at 1.1225) would indicate that a short-term bottom is in place. Meanwhile, EUR could trade sideways for a couple of days before making another attempt to move towards 1.1130.

GBP/USD:

24-HOUR VIEW: GBP is expected to consolidate and trade sideways, likely within a 1.2680/1.2760 range. Brexit headlines sent GBP soaring to an overnight of 1.2815. However, the advance was short-lived as GBP dropped back quickly to end the day slightly lower at 1.2706. The rapid swing has resulted in a mixed outlook. On the downside, the major 1.2670 support is unlikely to come under threat. Conversely, GBP is highly unlikely to move above the 1.2815 high. All in, GBP is more likely to consolidate and trade sideways at these lower levels, expected to be within a 1.2680/1.2760 range.

1-3 WEEKS VIEW: Focus is at 1.2670. We indicated yesterday (21 May, spot at 1.2735) that the “focus is at 1.2670” and added, “shorter-term conditions are severely oversold and any further weakness would likely be at a slower pace”. GBP subsequently touched 1.2685 before Brexit headlines sent it surging to a high of 1.2815. However, the advance was fleeting as GBP dropped back quickly to end the day slightly lower at 1.2706 (-0.11%). As our 1.2840 ‘key resistance’ is still intact, the focus remains at 1.2670 even though oversold conditions continue to suggest the prospect for further extension to the next support at 1.2630 is not high.

AUD/USD:

24-HOUR VIEW: AUD is expected to trade sideways, likely between 0.6865 and 0.6915. Instead of trading sideways, AUD tumbled on talks of rate cut by RBA. Despite the relatively sharp drop, downward momentum has not improved by much and the risk for further sustained decline is not high, at least for today. From here, AUD is more likely to consolidate and trade sideways, expected to be between 0.6865 and 0.6915.

1-3 WEEKS VIEW: Prospect for a move to 0.6835 has diminished. AUD surrendered all the post-election gains made on Monday as talk of rate cut by RBA sent it tumbling to an overnight low of 0.6866. Despite the relatively rapid drop, downward momentum has not improved by much. While the negative phase that started in late April is still intact, the price action over the past couple of days suggests the prospect for AUD to extend its weakness to 0.6835 has diminished. To put it another way, the negative phase to be struggling to maintain its downward momentum. From here, AUD has to ‘punch’ below last week’s 0.6865 low and accelerate lower or the risk of a short-term bottom would increase quickly. Conversely, if AUD were to move above the 0.6945 ‘key resistance’ (level was at 0.6975 yesterday), it would indicate the end of the current negative phase and the start of a ‘sideway-trading’ phase.

NZD/USD:

24-HOUR VIEW: NZD could dip below the major 0.6500 support but 0.6485 is unlikely to come into the picture. Expectation for NZD to trade sideways was incorrect as it dropped sharply and tested the major 0.6500 support (low of 0.6500). The decline appears to be running ahead of itself and while a dip below 0.6500 would not be surprising, the next support at 0.6485 is unlikely to come into the picture. On the upside, only a move above 0.6530 would indicate that the current weakness has stabilized (stronger resistance level is at 0.6545).

1-3 WEEKS VIEW: NZD could continue to edge lower but 0.6465 is expected to offer solid support. We have maintained the same narrative for about two weeks (see update on 08 May, spot at 0.6560) wherein NZD is “expected to test the rising weekly trend-line at 0.6500”. NZD finally touched 0.6500 yesterday (21 May) and is currently holding just above this solid support level. While the 2-week down-move is moving into oversold territory, it is too soon to expect an end to the current negative phase. Only a move above 0.6560 (‘key resistance’ previously at 0.6600) would indicate that a short-term bottom is in place. Until then, NZD could continue to edge lower but 0.6465 is expected to offer solid support. The next support below 0.6465 is at the 2018 low of 0.6425. Unless NZD can ‘accelerate’ downwards within the next few days, the odds for a move to 0.6425 are not high for now.

USD/JPY:

24-HOUR VIEW: Room for advance in USD to test 110.80 first before easing off. We expected USD to “retest 110.30” yesterday but the subsequent advance exceeded our expectation as it surged to an overnight high of 110.67. While the rapid rise appears to be running ahead of itself, there is room for a test of the 110.80 resistance first before easing off (next resistance is at 111.10). Support is at 110.30 followed by 110.00.

1-3 WEEKS VIEW: USD has moved into a sideway-trading phase. We indicated yesterday (21 May, spot at 110.05) that USD has “moved into a sideway-trading phase” and added, “the immediate bias is tilted to the upside but for now, any USD strength is unlikely to move significantly above the top of the expected 109.40/110.80 range”. We continue to hold the same view but the rapid rise yesterday suggests USD could trade sideways at a higher range than currently expected. That said, USD has to break the strong 110.80 level in order to indicate that it has moved into a higher trading range.

Source: efxdata

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