The US dollar took a breather from its gains following the upbeat durable goods orders. What’s next? US GDP is coming and here are the technical levels to watch.
Here is their view, courtesy of eFXdata:
EUR/USD: EUR is still under pressure, next support at 1.1070.
There is not much to add to the update from yesterday (25 Apr, spot at 1.1155). As highlighted, the “improved downward pressure suggests EUR could weaken further even though it is unclear at this stage if the next major support at 1.1070 would come into the picture”. Oversold short-term indicators could lead to a few days of consolidation first. All in, EUR is expected to remain under pressure until it can break above the 1.1210 ‘key resistance’ (level was at 1.1240 yesterday). Looking ahead, a break of 1.1070 would shift the focus to the ’round-number’ support of 1.1000.
GBP/USD: GBP remains under pressure but Feb’s low of 1.2773 may be out of reach. No change in view from yesterday, see reproduced update below. ‘Key resistance’ has moved slightly lower to 1.2970 from 1.2995.
We highlighted yesterday (24 Apr, spot at 1.2940) “GBP is expected to move to 1.2900 followed by 1.2870″. GBP subsequently dropped to 1.2887 during late NY hours. The vastly improved downward momentum suggests that a break of 1.2870 would not be surprising. However, the next major support at 1.2773 (low in Feb) may be out of reach this time around. All in, GBP is expected to remain under pressure until it can move above the 1.2995 ‘key resistance’ (level was at 1.3020 yesterday).
AUD/USD: A NY close below 0.7005 would open up the way for AUD to move to 0.6950.
AUD dipped briefly below the key 0.7005 support but rebounded quickly (low of 0.6988) and closed largely unchanged at 0.7016 (+0.04%). As highlighted yesterday (25 Apr, spot at 0.7015), only a NY close below 0.7005 would open up the way for AUD to move to 0.6950. Meanwhile, AUD is not out of the woods yet and only a break above the 0.7100 ‘key resistance’ (no change in level) would indicate that a short-term bottom is in place. On a shorter-term note, AUD should ideally hold below the short-term resistance at 0.7070.
NZD/USD: NZD is still weak but unclear if can extend weakness to next support at 0.6485. No change in view from yesterday, see reproduced update below.
We indicated yesterday (24 Apr, spot at 0.6655) that the “prospect for further weakness to the year-to-date low 0.6591 has increased”. NZD subsequently dropped to a low of 0.6582 before ending the day on a weak note (-0.96%). From the perspective of multi-week, the next significant support is about another 100 pips lower at 0.6485 (rising trend-line on the weekly chart, not visible in the chart below). However, the current decline is deep in oversold territory now and it is unclear at this stage whether NZD could extend lower to 0.6485. Note that the current negative phase (that started in late March) is in its fourth week now. Overall, NZD is still weak and only a move back above the 0.6680 ‘key resistance’ (level was at 0.6705 yesterday) would indicate that the negative phase has ended.
USD/JPY: USD has likely moved into a consolidation phase.
After registering a 4-month high of 112.39 on Wed (24 Apr), USD plummeted and closed sharply lower at 111.62 (-0.49%). While we indicated yesterday that USD “may not be ready to challenge 112.60 just yet”, the relatively sharp decline was not exactly expected. The break of the 111.60 ‘key support’ indicate that the ‘positive’ phase that started earlier last week has ended. From here, USD is viewed to have moved into a consolidation phase. In other words, USD is expected to trade sideways for the next couple of weeks, likely within a broad 111.00/112.30 range.
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