The US Dollar is gaining ground, moving up across the board. What levels should we look out for?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR under pressure but major 1.1530 support could be out of reach.
We indicated last Friday (28 Sep, spot at 1.1640) EUR is expected to “stay under pressure in the coming days” and added, the “major 1.1530 support could be out of reach”. EUR dropped to a low of 1.1566 during NY hours last Friday before edging lower to touch 1.1561 yesterday (01 Oct). The lackluster downward momentum reinforces our view wherein we continue to see downside risk for EUR but any weakness may be limited to a ‘test’ of 1.1530. On the upside, only a break of the 1.1660 ‘key resistance’ (level previously at 1.1730) would suggest that a short-term low is in place. Looking further ahead, a clear break below 1.1530 would suggest EUR is ready to challenge the next support at 1.1450.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP is under pressure but any weakness may struggle to break 1.2940.
We highlighted last Friday (28 Sep, spot at 1.3075) “downward momentum has picked up and the chance for a break below 1.3020 appears to be higher than even” and added, “a clear break below 1.3020 would indicate GBP is ready to challenge the next support at 1.2940”. GBP subsequently cracked 1.3020 during NY hours on Friday (low of 1.3000) before rebounding slightly yesterday (01 Oct). While downward momentum has not improved all that much, the near-term bias is on the downside even though any GBP weakness may struggle to break 1.2940. All in, we expect GBP to stay under pressure in the coming days unless it can reclaim the 1.3170 ‘key resistance’.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Still a slim chance AUD may test the 0.7140 support.
In our update last Friday (28 Sep, spot at 0.7205), we held the view that AUD is “expected to stay under pressure in the coming days” and “0.7140 is a solid support and is unlikely to yield so easily”. The price action since then has been lackluster at best and the recent mild downward pressure has eased somewhat. That said, only a break of 0.7260 would indicate that a short-term low is in place. Until then, there is still a slim chance that AUD may test the 0.7140 support but this has to happen within these 1 to 2 days.
NZD/USD: Neutral (since 20 Aug 18, 0.6625): NZD has moved back into a consolidation phase.
NZD traded in a relatively manner since our last update on Friday (28 Sep, spot at 0.6615) and there is no change to our view. The outlook for NZD remains neutral and the current movement is viewed as part of a 0.6560/0.6660 consolidation range.
USD/JPY: Bullish (since 02 Oct 18, 113.95): Immediate ‘target’ is at 114.70.
We highlighted last Friday (28 Sep, spot at 113.40) a “NY closing above 113.75 would indicate the current positive USD outlook has morphed into a bullish phase”. The condition was met when USD closed at 113.91 yesterday (01 Oct). The immediate bullish ‘target’ is at 114.70 while the ‘stop-loss’ level is at 113.15. That said, short-term indicators are at severely overbought levels and this could lead to a couple of days of consolidation first (before the next leg higher in USD can be expected).
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