The US dollar is gaining ground across the board. What levels should we be looking at?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR under mild downward pressure, could test major 1.1265/85 support zone.
We continue to hold the same view from last Friday (08 Feb, spot at 1.1345) wherein EUR is “under mild downward pressure and could test the major 1.1265/85 support zone”. EUR subsequently drifted lower and touched a ‘fresh’ low of 1.1317 before settling slightly lower at 1.1328 (-0.10%). The lackluster price action reinforces our view and we continue to expect EUR to stay under mild downward pressure unless it can move above 1.1400 (‘key resistance’ was at 1.1420 last Friday).
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Pull-back in GBP could extend lower to 1.2820.
There is not much to add to our update from last Friday (08 Feb, spot at 1.2950). As highlighted, despite the relatively sharp drop from the late-Jan peak of 1.3218, we view the weakness in GBP as part of a ‘corrective pull-back’ and not the start of a sustained decline. That said, the pull-back could extend lower and test the 1.2820 support. On the upside, a move above 1.3030 (level was at 1.3060 last Friday) would indicate the current weak phase in GBP has stabilized.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is likely to weaken further but expect solid support at 0.7000. No change in view.
The sharp plunge in AUD on Wednesday (06 Feb) has resulted in a rapid pick-up in downward momentum. From here, AUD is expected to stay under pressure unless it can overcome the ‘key resistance’ at 0.7160. While AUD is likely to weaken further, we expect 0.7000 to offer solid support and a sustained drop below this level would come as a surprise.
NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD is expected to test the major 0.6665 support. No change in view.
NZD plummeted on Wednesday (06 Jan) and closed on a weak note. From a short-term perspective, oversold conditions suggest NZD could consolidate for a few days. However, barring a move above the 0.6820 ‘key resistance’, NZD is expected to weaken further and test the major 0.6665 support in the days ahead. At this stage, the prospect for a sustained move below this level is not high.
USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is expected to trade sideways.
USD traded in a muted manner last Friday and closed little changed in NY (109.72, -0.07%). As highlighted on Friday, the recovery from the late-Jan low of 108.48 lacks momentum and we have doubts about the sustainability of the rebound. In our view, USD is likely to trade sideways from here, likely within a relative broad 109.00/110.30 range.
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