After a brief break for the Mid-Terms, the US Dollar is on a roll once again. What’s next?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): Scope for EUR to retest 1.1300.
There is not much to add to last Friday’s (09 Nov, spot at 1.1365) update. As highlighted, the sharp and rapid drop from last Wednesday (07 Nov) peak of 1.1500 indicates there is scope for EUR to retest the major 1.1300 support. The prospect for a break of this level has improved and an NY closing below this major support would suggest EUR could weaken further to the next support at 1.1220. All in, we continue to adopt a ‘negative’ view unless EUR can move back above the 1.1410 ‘key resistance’ (level was at 1.1450 last Friday).
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP has moved into a consolidation phase.
Despite the strong surge in GBP early this month, we have held the same view since last Wednesday (07 Nov, spot at 1.3100) wherein “it would be surprising if the rebound in GBP could break 1.3190″ (GBP subsequently traded to a high of 1.3176). However, the manner of which it plunged below the 1.3000 ‘key support’ last Friday was not exactly expected (low of 1.2959). While the price action does not change the overall neutral outlook for GBP, upward pressure has eased and the 1.3176 high is deemed as a short-term top. In other words, we do not expect GBP to move above 1.3176 for the next couple of weeks. For now, we view the current movement as part of a consolidation phase. Near-term, the bias is tilted to the downside but at this stage, we view any weakness as part of a broad 1.2800/1.3080 range.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Anticipating further AUD strength to 0.7315.
Despite overall positive indications, AUD has not been able to make much headway on the upside. It touched a high of 0.7303 last Thursday (08 Nov) but has since eased off. For now, we continue to see a chance for AUD to test the strong 0.7315 resistance. However, in order to maintain the current momentum, AUD has to move higher soon (say within this week) as a prolonged consolidation would quickly diminish the prospect for further AUD strength. Conversely, a break of the 0.7150 ‘key support’ (no change in level) would suggest that 0.7303 is a short-term top.
NZD/USD: Neutral (since 20 Aug 18, 0.6625): Further NZD strength is not ruled out but 0.6850 is likely out of reach.
There is not much to add to last Wednesday (07 Nov, 0.6740) update. As highlighted, “further NZD strength is not ruled out but 0.6850 is likely out of reach”. After last Friday’s soft daily closing (NY close of 0.6737, -0.26%), it appears that NZD is close to making a short-term top. However, confirmation is only upon a move below the ‘key support’ at 0.6690 (level was previously at 0.6670).
USD/JPY: Neutral (since 09 Oct 18, 113.10): Focus is at 114.54 now. No change in view.
While we highlighted yesterday (08 Nov, spot at 113.55) “there is a good chance for USD to move to 114.00″, the pace of the advance has been faster than anticipated (USD touched 114.08 during NY hours). As highlighted, a break of 114.00 would shift the focus to the October’s peak of 114.54. At this stage, the odds for a sustained move above 114.54 are not high. All in, we continue to expect USD stay underpinned in the coming days as long as the 113.20 ‘key support’ is intact (level previously at 112.90).
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