Markets are nervous ahead of the all-important testimony by Fed Chair Jerome Powell. Where will the greenback go?
Here is their view, courtesy of eFXdata:
EUR/USD:
24-HOUR VIEW EUR could dip below 1.1200 but 1.1180 is unlikely to come into the picture for now. Yesterday, we held the view EUR “could test 1.1200 but the mid-June low of 1.1180 is not expected to come into the picture for today”. EUR subsequently drifted to a low of 1.1205 before settling little changed at 1.1217 (-0.09%). The underlying tone is still of the soft side and from here, EUR could dip below 1.1200. That said, 1.1180 is still unlikely to come into the picture for now. Resistance is at 1.1230 but the stronger level is at 1.1245.
1-3 WEEKS VIEW EUR is expected trade with ‘downside bias’ towards 1.1180. No change in view from yesterday, see reproduced update below. However, the strong resistance level has edged lower to 1.1270.
We have held the same view last Tuesday (02 Jul, spot at 1.1285) wherein EUR “is in a sideways-trading phase” but we added, “the soft underlying tone suggest the immediate bias is tilted to the downside”. However, the expected ‘solid support’ at 1.1220 (bottom of the expected 1.1220/1.1340 range) did not materialize as EUR crashed to a low of 1.1205 last Friday (05 Jul). Downward momentum has improved even though not by as much as we would like. From here, EUR is expected to trade with a ‘downside bias’ towards the mid June low near 1.1180. A dip below this level is not ruled out but at this stage, the risk for a break of the year’s low at 1.1106 is not high. On the upside, only a move above the strong resistance at 1.1290 would indicate the current downward pressure has eased.
GBP/USD:
24-HOUR VIEW GBP is expected trade sideways, likely within a 1.2490/1.2550 range. While the expectation that last Friday’s 1.2481 low is a short-term bottom was not wrong, the registered range of 1.2500/1.2540 yesterday was much narrower than our expected sideway-trading range of 1.2490/1.2560. The subdued price action offers no fresh clue and GBP is expected to continue to trade sideways, likely between 1.2490 and 1.2550.
1-3 WEEKS VIEW GBP is under pressure but odds for a fresh year-to-date low are not high for now. There is not much to add to the update from yesterday (08 Jul, spot at 1.2645). As highlighted, after the large drop last Friday that cracked the June’s low of 1.2507 (low of 1.2481), downward momentum has improved and the focus has shifted to the year-to-date low of 1.2409 (registered in early January). That said, the odds for a move to this level are not high for now (there is relatively strong support at 1.2440). Overall, GBP is expected to stay under pressure unless it can move above 1.2590.
AUD/USD:
24-HOUR VIEW AUD could drift lower but a sustained decline below last Friday’s 0.6958 low is not expected. AUD traded between 0.6967 and 0.6994, narrower than our expected 0.6965/0.7005 range. The underlying tone has weakened somewhat and from here, AUD could drift lower but sustained decline below last Friday’s 0.6958 low is not expected (next support is at 0.6940). On the upside, 0.7005 is expected to be strong enough to cap any intraday AUD strength (minor resistance is at 0.6990).
1-3 WEEKS VIEW AUD is expected to trade sideways. AUD traded in a quiet manner and there is not much to add to the update from yesterday (08 Jul, 0.6985). As highlighted, AUD has likely moved back into a ‘sideway-trading phase’ and is expected to trade between 0.6920 and 0.7030 for now.
NZD/USD:
24-HOUR VIEW NZD is expected to trade sideways, likely between 0.6605 and 0.6645. NZD traded between 0.6615 and 0.6653 yesterday, relatively close to our expected sideway-trading range of 0.6610/0.6655. Further range trading seems likely even though the slightly weaker underlying tone suggests a lower range of 0.6605/0.6645.
1-3 WEEKS VIEW NZD is expected to trade sideways. No change in view from yesterday, see reproduced update below.
NZD dropped to a low of 0.6603 last Friday, just below the bottom of our expected 0.6610/0.6730 sideway-trading range (see an update from last Tuesday, spot at 0.6675). Despite the large decline, downward momentum has not improved by that much. For now, we continue to hold the view that NZD is trading in a 0.6610/0.6730 range. However, if NZD were to close below 0.6610 in NY, it would indicate that it is ready to tackle the next support at 0.6560 (there is another relatively strong support at 0.6590).
USD/JPY:
24-HOUR VIEW Advance in USD could test 109.00 first before easing off. We held the view yesterday that “USD could edge higher but last month’s 108.80 peak is unlikely to yield so easily”. USD subsequently touched 108.80 during NY hours before settling on a firm note at 108.71. While upward momentum appears to be ‘tiring’, there is scope for USD to test 109.00 first before the current advance should ease off. Support is at 108.50 but only a move below 108.35 would indicate that upward pressure has eased.
1-3 WEEKS VIEW USD to stay supported, sustained gain only if it can move and stay above 108.80. USD closed on a firm note yesterday (+0.23%, 108.71). There is no change in our view from yesterday wherein USD is “expected to stay supported” but it has to “move and stay above 108.80″ in order to indicate that it is ready to advance in a sustained manner. In other words, if USD were to close above 108.80 in NY, it would suggest that USD is ready to move above 109.00 towards 109.30. On the downside, only a break of the strong support at 108.10 (level was at 107.75 yesterday) would indicate that a short-term top is in place.
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