Another week of Brexit begins but the Fed is also in the limelight. What’s next for currencies?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR has likely moved into a consolidation phase.
EUR rebounded and recouped most of last Thursday’s (07 Mar) decline before closing slightly higher on Friday. The price action reinforces our view as highlighted last Wed (13 Mar, spot at 1.1285) wherein EUR has moved into a consolidation phase and is expected to trade sideways. However, after the quiet price action over the past few days, we have narrowed the expected range to 1.1230/1.1380 from 1.1200/1.1380. Looking ahead, the prospect for a break of 1.1380 first is slightly higher but in view of the current lackluster momentum, any advance is expected to struggle to move beyond the next major resistance at 1.1420 (the late-Feb peak).
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP is expected to trade with a positive bias.
Volatility eased further as GBP traded within a range of less 100 pips last Friday (between 1.3204 and 1.3300), the narrowest daily range for the whole of last week. We continue to view the price action as part of sideways trading phase that could last for another couple of days but in the longer run, we still expect GBP to trade with a ‘positive bias’ (see an update from last Wed, 14 Mar, spot at 1.3290). As highlighted, a break of last week’s 1.3380 peaks could lead to further GBP strength to 1.3470. On the downside, the ‘key support’ has moved higher to 1.3100 from 1.3050. Only a break of the ‘key support’ would suggest that GBP has made a short-term top.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is expected to trade sideways.No change in view from last Friday, see reproduced update below.
There is no change to the view as highlighted on Wednesday (13 Mar, spot at 0.7070) wherein AUD has moved into a consolidation phase and is expected to trade sideways in the coming days. The rapid dip to 0.7042 yesterday (14 Mar) and the subsequent quick bounce from the low reinforce our view. In other words, there is no directional bias and AUD is expected to continue to trade sideways, likely between 0.7000 and 0.7120.
NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD has moved into a consolidation phase.
There is not much to add as NZD traded in a quiet manner last Friday and registered an ‘inside day’. The price action reinforces our view from last Tuesday (12 Mar, spot at 0.6835) wherein NZD has “moved into a consolidation phase”. In other words, we continue to expect NZD to trade sideways even though a 0.6775/0.6885 range is likely enough to contain the price action for the next several days (narrowed from 0.6750/0.6885 previously). Looking forward, the prospect for a break of 0.6885 first appears to be higher but in view of the lackluster momentum, any gain is expected to struggle to move beyond the solid resistance zone of 0.6805/20.
USD/JPY: Neutral (since 09 Oct 18, 113.10): Bias is tilted to the upside but advance could be limited and short-lived. No change in view from last Friday, see reproduced update below.
The “mild downward pressure” that we highlighted on Monday (11 Mar, spot at 111.05) fizzled out sooner than anticipated as USD moved above the strong 111.80 resistance yesterday (14 Mar). The underlying tone has improved and the bias for the next several days is tilted to the upside. However, momentum is not strong and any advance could be short-lived and limited to a test of 112.40. On the downside, last Friday (08 Mar) low near 110.80 is expected to be strong enough to hold, at least for several days (minor support is at 111.10).
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