Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY – July 23 2019

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Boris Johnson, the European Central Bank decision and high anticipation ahead of the Fed decision are all on investors´minds. What technical levels should we watch?

Here is their view, courtesy of eFXdata:

EUR/USD: 

24-HOUR VIEW EUR could drift lower to 1.1195. Expectation for EUR to “dip below the strong 1.1200 support” did not materialize as it traded within a tight range of 1.1204/1.1225. The underlying tone still appears soft and from here, EUR could drift towards 1.1195. The next support at 1.1180 is a stronger level and is unlikely to yield. Resistance is at 1.1225 but the stronger level is at 1.1240.

1-3 WEEKS VIEW EUR is expected to trade with sideways. EUR traded in a very tight range of 21 pips yesterday (between 1.1204 and 1.1225). This is the smallest 1-day range since April 2014. We continue to hold the same view wherein the “outlook for EUR is mixed” and it is “likely to trade sideways in an ‘undecided’ manner”. For now, a 1.1160/1.1300 range is likely enough to contain the price action in EUR, at least for several more days.

GBP/USD: 

24-HOUR VIEW GBP is expected to trade sideways, likely between 1.2445 and 1.2515. GBP traded between 1.2456 and 1.2518, narrower than our expected sideway trading range of 1.2460/1.2550. Momentum indicators are still most ‘neutral’ and GBP is expected to continue to trade sideways, albeit likely at lower range of 1.2445/1.2515.

1-3 WEEKS VIEW GBP is likely to trade sideways. GBP slipped to 1.2456 and closed lower for the second straight day (1.2479, -0.21%). While we continue hold the view that GBP is “likely to trade sideways”, the positive underlying tone detected previously has dissipated. In other words, our expectation for GBP to “test the top of the expected sideway range of 1.2430/1.2640 first” is unlikely to materialize. From here, GBP is expected to continue to trade sideways, even though likely at a lower and narrower range of 1.2400/1.2580.

AUD/USD: 

24-HOUR VIEW AUD is expected to continue to trade sideways, likely within a 0.7020/0.7060 range. AUD registered a range of 0.7031/0.7058, narrower than our expected range of 0.7020/0.7065. The quiet price action offers no fresh clue and AUD could continue to trade sideways for now. Expected range for today, 0.7020/0.7060.

1-3 WEEKS VIEW Prospect for further AUD strength has diminished. Despite breaking the strong resistance levels at 0.7050 and 0.7070 last week (and closing at a 3-month high last Thursday, 18 Jul), AUD has not been able to build on its momentum. For now, we continue to hold the view that AUD could extend its advance even though the prospect for further strength has diminished. On the downside, a break of the 0.7000 ‘key support’ (no change in level) would indicate that our view for a move to 0.7110 is incorrect.

NZD/USD: 

24-HOUR VIEW NZD could drift lower but any weakness is viewed as a lower trading range of 0.6740/0.6785. We expected NZD to trade sideways within a 0.6740/0.6780 range yesterday. However, NZD traded in a quiet manner and within a narrower range than expected (0.6757/0.6786). The subsequent daily closing is on the soft side and from here, NZD could drift lower to 0.6740. For now, any down-move is viewed as part of a lower 0.6740/0.6785 range and a sustained decline is not expected.

1-3 WEEKS VIEW Risk of a short-term top has increased. Despite overall positive indications, NZD has not been able to capitalize on its strong advance from last week. The relatively rapid retreat from last Friday’s (19 Jul) 0.6789 peak has dented the upward momentum and our view for NZD to “extend its gains to 0.6815” is likely incorrect. From here, a dip below the 0.6725 ‘key support’ would indicate that 0.6789 is a short-term top and NZD is then likely to trade sideways for period. In order to revive the rapidly waning momentum, NZD has to move and stay above 0.6785 within these 1 to 2 days or the risk of a short-term top would increase quickly.

USD/JPY: 

24-HOUR VIEW USD is expected to trade sideways, likely within a 107.70/108.10 range. We highlighted yesterday USD “could test 108.00 but any advance is viewed as a higher trading range of 107.40/108.00”. USD subsequently touched 108.06 briefly before trading sideways for rest of the session. Momentum indicators are mostly ‘neutral’ now and USD is likely to continue to trade sideways for today, albeit likely at a slightly higher range of 107.70/108.10.

1-3 WEEKS VIEW USD is likely to trade sideways. The relatively strong rebound from last Thursday (18 Jul) steep decline was not exactly expected. While we “have doubts about the sustainability of any USD weakness”, we expected USD to “trade with a downside bias”. The price action over the past couple of days suggests that USD is likely caught in a broad 107.40/108.40 range.

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