The US Dollar is on the back foot once again after weak data and reports that the Fed will pause in the spring. What levels should we watch?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): Rebound in EUR could extend further to 1.1500.
There is not much to add to the update from yesterday (19 Nov, spot at 1.1410). As highlighted, the positive price action over the past several trading days suggests the current “rebound in EUR could extend further to 1.1500″. 1.1500 is a rather strong resistance and for now, the prospect for a clear break above this level is not high. However, only a move below the 1.1355 ‘key support’ (level was at 1.1310 yesterday) would indicate that the current ‘positive’ phase in EUR has ended. Looking ahead, if there is an NY closing above 1.1500, it would suggest last week’s low near 1.1215 is a more significant bottom than currently expected. The next resistance above 1.1500 is at 1.1550 followed by the key level of 1.1580.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Prospect of a fresh low for the year has increased.
The recent high volatility has eased as GBP traded in a relatively calm manner over the past couple of trading days. For now, we view the price action as part of a short-term consolidation phase and we still see the risk of GBP moving below the year-to-date low at 1.2662. As indicated last Friday (16 Nov, spot at 1.2775), we expect GBP to stay under pressure unless it can move and stay above 1.2980. Until then, GBP could continue to consolidate and trade sideways for a couple more days.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Next level to focus on is at 0.7380.
There is not much to add to the update from yesterday (19 Nov, spot at 0.7310). As indicated, while upward momentum is not as ‘impulsive’ as preferred, the break of the 0.7315 resistance last Friday (16 Nov) has shifted the focus to the next major resistance at 0.7380. In view of the less than stellar momentum, 0.7380 may not come into the picture so soon. On a shorter-term note, 0.7355 is already a strong resistance level. On the downside, the ‘key support’ remains unchanged at 0.7220 (a break of this level would indicate that short-term top is in place).
NZD/USD: Neutral (since 20 Aug 18, 0.6625): Expect further NZD strength to 0.6900. No change in view.
We indicated last Friday (16 Nov, spot at 0.6825) a “NY closing above 0.6850 would suggest further NZD strength to 0.6900″. NZD subsequently staged a surprisingly strong rise before closing at 0.6879 in NY (well above the 0.6850 level). From here, the focus is at 0.6900 and break of this level would indicate that NZD has found a mid to long-term bottom at 0.6424 last month. In other words, a break of 0.6900 would suggest the 0.6424 low would likely remain intact in the coming weeks, possibly months. Meanwhile, only a move below 0.6800 (‘key support’ previously at 0.6750) would suggest that an interim top is in place.
USD/JPY: Neutral (since 09 Oct 18, 113.10): Chance for USD to weaken further to 112.00.
There is not much to add to the update from yesterday (19 Nov, spot at 112.80). As highlighted, the rapid increase in downward momentum suggests there is “chance for USD to weaken further to 112.00″. This is a relatively strong support and a clear break of this level would suggest USD is ready to challenge the October low of 111.36. On the upside, the ‘key resistance’ level has edged lower to 113.40 from 113.60. A break of the ‘key resistance’ would indicate that the current downward pressure in USD has eased.
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