A risk-on atmosphere has been the dominant theme with rising stocks and a falling Japanese yen. What targets should we look at?
Here is their view, courtesy of eFXnews:
EUR/USD: Neutral (since 05 Mar 18, 1.2335): Immediate pressure has shifted to the upside.
We highlighted yesterday (26 Mar, 1.2365) that the “recent mild downward pressure has eased” and that EUR is expected ‘to trade sideways between 1.2240 and 1.2450”. However, the subsequent rapid rise that hit an overnight high of 1.2462 was unexpected. The sharp up-move has shifted the immediate pressure to the upside and for the next few days, we expect EUR to stay underpinned. That said, it is too early to expect the start of a bullish phase even though a test of the year-to-date high of 1.2555 is a distinct possibility (with strong intervening resistance at 1.2500). Overall, we expect the current upward pressure to improve further as long as the key support at 1.2340 is not taken out. On a shorter-term note, 1.2395 is already a relatively strong support.
GBP/USD: Neutral (since 07 Mar 18, 1.3895): Prospect for a move above 1.4280 has increased.
While we have held a positive GBP view since last Thursday (22 Mar, spot at 1.4145), the resilience of the up-move came as a surprise. We noted that further strength is not ruled out but were of the view that it would “surprising if GBP can move above the February’s peak near 1.4280”. In view of the vastly improved upward momentum, the prospect for a move above this level has increased considerably. At this stage, the probability for further extension to the year-to-date high of 1.4346 is not high but it would continue to improve as long as 1.4110 is intact (key support previously at 1.4000). On a shorter-term note, 1.4140 is already a strong support.
AUD/USD: Neutral (since 22 Mar 18, 0.7770): AUD has moved into a consolidation phase.
The choppy price action for the past few days reinforces our current view that AUD is in a consolidation phase. In other words, the neutral phase that started last Thursday (22 Mar, 0.7770) is still intact and we continue to expect AUD to trade sideways, likely within a 0.7650/0.7820 consolidation range. That said, the undertone has improved somewhat the immediate bias is for a probe towards the top of the expected consolidation range.
NZD/USD: Neutral (since 05 Feb 18, 0.7280): Scope for a test of the strong 0.7355 resistance.
NZD tested the top our expected 0.7160/0.7300 consolidation range with a high of 0.7301 yesterday. The undertone has improved with the subsequent strong daily closing in NY and from here; there is scope for a test of the 0.7355 high seen earlier this month. The odds for a sustained move above this level are not high at this stage but would continue to improve as long as the key support at 0.7235 is intact.
USD/JPY: Neutral (since 21 Feb 18, 107.35): USD has moved back into a consolidation range.
Despite the sharp decline late last week, we highlighted that we are “not convinced that the current month-long neutral phase has shifted to bearish”. However, the sharp and swift bounce yesterday came as a surprise. Downward pressure has eased and the 104.55 low registered early yesterday is likely a short-term low. There is no change to the neutral outlook but instead of ‘probing’ the next support at 104.00 (as expected previously), USD has likely moved into a broad 104.80/106.65 range. After the sharp rebound yesterday, the shortterm bias is tilted to the upside but 106.65 is a major level and is unlikely to yield so easily.
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