The UK Parliament rejected the Brexit deal once again and US data came out mixed once again. What’s next?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR has likely moved into a consolidation phase.
Despite dropping sharply last Thursday (07 Mar) and cracking several strong support levels, EUR has not been able to make much headway on the downside. The recovery from last Thursday’s low of 1.1174 moved above our 1.1290 ‘key resistance’ yesterday (12 Mar) and this indicates the weakness in EUR has stabilized (we previously expected EUR to decline further to 1.1120). From here, EUR is deemed to have moved into a consolidation phase and is expected to trade sideways for the next 1 to 2 weeks, likely within a broad range of 1.1200/1.1380.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Outlook unclear, further choppy and wild swings seem likely.
While we highlighted yesterday (12 Mar, spot at 1.3250) “despite the rapid and strong advance, it is unclear at this stage whether GBP could extend its up-move in the coming days”, the sudden and sharp reversal from the Tokyo hours high of 1.3290 came a surprise (GBP plummeted to 1.3005 before rebounding quickly). The volatile price action amidst a vastly expanded trading range has resulted in an unclear outlook and Brexit headlines could lead to further choppy and wild swings in the coming days. For now, the major levels to monitor are at 1.3350 and 1.2945. As highlighted yesterday, only a clear break of last month’s peak near 1.3350 would suggest that GBP is ready to tackle the next resistance at 1.3470. On the downside, a break of last week’s 1.2945 low would greatly increase the prospect for a drop to 1.2860.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is expected to trade sideways.
AUD edged slightly above our 0.7090 ‘key resistance’ yesterday (high of 0.7092) before easing off. As highlighted, a breach of the ‘key resistance’ would indicate that last Friday’s 0.7003 low is the extent of the current weak phase in AUD (we previously expected AUD to weaken further to 0.6970). From here, AUD is deemed to have moved into a consolidation phase and is expected to trade sideways in the coming days, likely within a 0.7000/0.7120 range. Looking forward, the expected consolidation phase is likely to be resolved with a downside break but 0.7000 is acting as a solid support now and is unlikely to yield so easily.
NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD has moved into a consolidation phase. No change in view from yesterday.
NZD touched a high of 0.6836 yesterday, just a few pips below the 0.6840 ‘key resistance’. The strong advance is enough to indicate that the recent mild downward pressure has eased. From here, NZD is deemed to have moved into a consolidation phase and is expected to trade sideways within a broad range, likely between 0.6750 and 0.6885.
USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is under mild downward pressure, could grind lower and test 110.40.
There is not much to add as USD traded in a relatively quiet manner over the past couple of days. We continue to hold the same as last Friday (08 Mar, spot at 111.60) wherein USD is under mild downward pressure and could grind lower and test 110.40. On the upside, a break of 111.80 would indicate that the current mild downward pressure has eased.
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