Markets kicked off the short Easter week on a calm note, a risk-on atmosphere. What’s next? What levels should we watch?
Here is their view, courtesy of eFXdata:
EUR/USD: A NY close above 1.1330 would suggest EUR is ready to tackle 1.1400.
While we have expected EUR to “trade with an upside bias” for more than a week (see update on 04 Apr, spot at 1.1245), we were of the view that the “prospect for EUR to move to the next resistance at 1.1330 is deemed as low”. After struggling to move above the relatively strong 1.1300 resistance for a few days, EUR surged past this level and hit a high of 1.1325 last Friday (12 Apr). The rapid improvement in upward momentum suggests the risk for a higher EUR has increased. From here, if EUR could close above 1.1330 in NY within these few days, it would be a strong indication that EUR is ready to challenge the next resistance at 1.1400. On the downside, only a break of the 1.1240 ‘key support’ (level was previously at 1.1220) would suggest that the current upward pressure has eased.
GBP/USD: GBP is expected to trade sideways within a broad range. No change in view from last Friday, see reproduced update below.
There is not much to add as GBP traded within a relatively narrow range between 1.3050 and 1.3107 and registered an ‘inside trading day’. We have held the same view more than a week (since last Thursday, 04 Apr) that GBP is “expected to trade sideways within a broad range”. After the quiet price action over the past couple of days, a 1.2950/1.3150 range is likely enough to contain the movement in GBP from here (adjusted from 1.2900/1.3200 previously).
AUD/USD: AUD strength could extend to 0.7210.
We highlighted last Thursday (11 Apr, spot at 0.7170) that a “break of 0.7190 would suggest AUD is ready to tackle the Feb’s peak of 0.7210”. AUD opened on a weak note on Friday (12 Apr) before staging a robust rally that hit a high of 0.7193 during NY hours. Upward pressure has improved further and from here, the current strength in AUD could extend to 0.7210 in the coming days. 0.7210 is a rather critical resistance and a clear break of this level would suggest AUD is ready to move even higher in the weeks ahead (next significant resistance is at the Jan’s peak near 0.7295). On the downside, only a break of the 0.7115 ‘key support’ (level was at 0.7080 last Friday) would suggest that a short-term top is in place.
NZD/USD: Risk of a short-term bottom has increased.
While NZD dropped to a low 0.6714 early last Friday (12 Apr), it staged a sudden and sharp reversal and hit 0.6782 before ending the day on a firm note in NY (0.6760, +0.47%). While our 0.6785 ‘key resistance’ is still intact, the price action suggests that the risk of a short-term bottom has increased. In other words, the ‘negative phase’ started in late March appears to be close to ending (confirmed upon a break of 0.6785). Meanwhile, NZD could attempt to move towards 0.6700 but the odds for such a move have diminished considerably.
USD/JPY: USD is expected to trade with a positive bias but 112.60 could be out of reach.
The ‘sideway-trading phase’ in USD that started in late March has ended as it hit a high of 112.09 last Friday before closing at a 4-month high of 112.02. The price action suggests the current USD strength could extend further in the coming days even though the major 112.60 resistance could be out of reach. All in, we expect USD to trade with a positive bias and only a break of the 111.20 ‘key support’ would suggest that the current ‘positive phase’ in USD has ended.
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