It’s Super Wednesday with he ECB, the FOMC Minutes, and the all-important EU Summit on Brexit. How are currencies positioned?
Here is their view, courtesy of eFXdata:
EUR/USD: Short-term bottom in place; EUR is expected to trade with an upside bias.
EUR touched a 2-week high of 1.1285 yesterday before easing off quickly to end the day little changed at 1.1261 (+0.02%). The price action is in line with our expectation from last Thursday (04 Apr, spot at 1.1245) wherein last Tuesday’s (02 Apr) low of 1.1181 is a shortterm bottom and EUR has moved into a ‘corrective recovery’ phase and is expected to “trade with an upside bias” towards 1.1300. While it is too early to call for an end to the ‘recovery phase’, short-term momentum indicators are beginning to wane and a break of 1.1220 (level previously at 1.1200) would indicate that the current upward pressure has eased. To put it another way, the prospect for EUR to move to the next resistance at 1.1330 is still deemed as low (from here, 1.1300 is already quite a solid level)
GBP/USD: GBP is expected to trade sideways within a broad range.
There is not much to add as GBP traded sideways yesterday and ended the day slightly lower at 1.3050 (-0.09%). As highlighted in recent updates, there is no clear direction for GBP and we continue to hold the view that it is trading sideways, likely within a broad 1.2900/1.3200 range.
AUD/USD: No clear direction, AUD is expected to trade sideways.
AUD briefly touched a 3-week high of 0.7152 before dropping back quickly to end the day largely unchanged at 0.7123 (-0.03%). The price action is line with our expectation from more than 2 weeks ago (25 Mar, spot at 0.7080) wherein there is “no clear direction” and AUD is expected to trade sideways between 0.7040 and 0.7190. Most indicators are ‘neutral’ and at this stage, there is no ‘early’ indication that AUD is ready to embark on a sustained directional move anytime soon.
NZD/USD: Prospect for a sustained drop below the 0.6700/20 support zone is not high.
There is not much to add as NZD traded within a tight 20 pips range (narrowest 1-day range this year) before closing unchanged at 0.6743. For now, the weak phase in NZD that started from late last month is still deemed as intact but as highlighted since last Wednesday (03 Apr, spot at 0.6750), the “prospect for a sustained drop below the 0.6700/20 support zone is not high”. Only a break of the 0.6785 ‘key resistance’ (no change in level) would indicate that the current downward pressure has eased.
USD/JPY: USD has moved into a sideway-trading phase.
The relatively sharp drop in USD that hit an overnight low was not exactly unexpected. The break of 111.10 suggests that the recent mild upward pressure has eased and that USD is still in a “sideway-trading phase”. For the next one-week or so, a 110.50/112.00 range should be enough to contain the price action in USD.
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