The US dollar is losing ground against the pound but rising against the yen while the euro remains stable. What’s next?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 05 Mar 18, 1.2335): Upward pressure dented but another attempt towards 1.2400 is not ruled out.
The release of ECB’s minutes yesterday sent EUR tumbling to a low of 1.2298. The ‘key support’ highlighted at 1.2280 in recent updates is still intact and as long as this level is not taken out, we continue to see chance for EUR to stage another attempt to move clearly above 1.2400. However, upward pressure has been dented and the odds for a clear break above 1.2425 have diminished. Further up, last month’s top at 1.2475 is unlikely to come into the picture.
GBP/USD: Neutral (since 07 Mar 18, 1.3895): GBP may enough fuel to make a run for 1.4280.
In the update yesterday (13 Apr, 1.4185), we highlighted that the “prospect for a move above last month’s 1.4244 peak has increased”. In line with expectation, GBP extended its advance and edged above 1.4244 to touch an overnight high of 1.4246. The subsequent strong daily closing in NY suggests GBP may have enough ‘fuel’ to make a run for the next resistance at 1.4280. This is a rather strong resistance and at this stage, the odds for a sustained move above this level are not high. Based on the current indications, a break above the year-to-date high of 1.4346 would come as a surprise. Overall, we continue to expect GBP to stay supported and only a break of 1.4145 (‘key support’ previously at 1.4110) would indicate that a short-term top is in place.
NZD/USD: Neutral (since 05 Feb 18, 0.7280): Current NZD strength has room to extend further.
In the update on Wednesday (11 Apr, 0.7370), we indicated that the current NZD strength has room to extend further. There is no change to the view but as noted previously, the year-to-date near 0.7345/40 is a major resistance and at this stage, we are not anticipating a clear break above this level. On the downside, support is at 0.7355 but only a break of 0.7320 would indicate that the immediate upward pressure has eased.
USD/JPY: Neutral (since 21 Feb 18, 107.35): USD is expected to trade sideways.
There is not much as USD continues to trade in a surprisingly quiet manner (the range since lasts Thursday has been less than 100 pips, between 106.60 and 107.49). We continue to hold a neutral stance but on shorter-term note, the undertone has improved and this could lead to a move above 107.50 but at this stage, any up-move is unlikely to break above the top of our expected 106.20/107.90 consolidation range.
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