The US Dollar is on a roll, even against the safe-haven Japanese yen. After these moves, what technical levels should we look out for? Here is the view from UOB:
Here is their view, courtesy of eFXdata:
EUR/USD: Bearish (13 Aug 18, 1.1400): Room for further weakness in the coming days.
In line with expectation, EUR extended its decline as it hit a ‘fresh’ low of 1.1328 yesterday. As highlighted on Monday (13 Aug, spot at 1.1400), there is “room for further weakness in the coming days” and the next level to focus on is at 1.1285 followed by 1.1185. The former level appears to be within reach sometime this week. On the upside, the ‘stop-loss’ level is adjusted lower to 1.1460 from 1.1500. Shorter-term, 1.1430 is already a strong resistance level.
GBP/USD: Bearish (since 09 Aug, spot at 1.2885): Oversold but further GBP weakness still likely.
The bearish phase that started late last week (see update on 10 Aug, spot at 1.2825) is still clearly intact as GBP eked out a fresh low of 1.2704 yesterday. As highlighted on Monday (13 Aug, spot at 1.2760), while the current decline in GBP is oversold, further GBP weakness is still likely. The low of 1.2704 was not far from the next ‘target’ of 1.2675 and a break of 1.2675 would shift the focus to 1.2590. All in, we continue to hold a bearish view until the ‘stop-loss’ level at 1.2840 is taken out (level was previously at 1.2880).
AUD/USD: Bearish (since 13 Aug 18, spot at 0.7285): No indication that bearish phase is ending soon.
We turned bearish AUD on Monday (13 Aug, spot at 0.7285) with an immediate ‘target’ of 0.7220 and were of the view that the “odds for further extension to 0.7160 are relatively high”. There is no change to our view as AUD dropped to an overnight low of 0.7224 and a break of 0.7220 would open up the way for a move to 0.7160. To put it another way, there is no indication that the current bearish phase is ending soon and only a break of the ‘stop-loss’ at 0.7330 (level previously at 0.7380) would suggest that a short-term low is in place.
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.
There is not much to add as NZD traded in relatively muted manner and ended the day largely unchanged (NY close of 0.6574, -0.06%). The bearish phase that started last Friday (10 Aug, spot at 0.6610) is still intact but as highlighted, “NZD is unlikely to maintain pace of decline but there is scope for extension to 0.6540”. There is no significant improvement in downward momentum and we continue to hold the same view. Looking ahead, a clear break 0.6540 would shift the focus to 0.6490. ‘Stop-loss’ level is currently at 0.6630 (previously at 0.6660).
USD/JPY: Neutral (since 23 Jul 18, 111.20): Outlook unclear, USD likely trading in a broad range.
Our recent expectation for USD to edge lower towards 109.35 is proven wrong as it staged a surprisingly strong rebound and hit an overnight high of 111.31. While the high is below the 111.50 ‘key resistance’, the strong daily closing is enough to indicate that the recent downward pressure has eased. We continue to hold a neutral USD view and after the recent choppy price action, the outlook for the next couple of weeks is unclear. The best call is probably for USD to grind higher but the 112.14 high seen early this month is a solid resistance and the odds for a break of this level are not high. It appears more likely that USD is trading in a broad range for now, probably between 110.30 and 112.20.
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