The US Dollar retreated but may be attempting to make a comeback of sorts. What’s next? What levels are of interest?
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR is ready to tackle the next resistance at 1.1745.
While we have been expecting a ‘robust recovery’ in EUR since last Tuesday (see update on 21 Aug, spot at 1.1485), the pace and extent of the rally over the past 2 days exceeded our anticipation (note that EUR rose by +1.21% over Friday and Monday, the largest 2day gain in 3 months). We highlighted yesterday (27 Aug, spot at 1.1625), the “probability for a clear break of 1.1670 has increased considerably†and a NY closing above this level would indicate that EUR is ready to tackle the next resistance at 1.1745. EUR subsequently hit a high of 1.1693 during NY hours before ending the day at 1.1677. In other words, there is still scope for further EUR strength (at least for another few more days) and the focus is at 1.1745. The next resistance is at 1.1790 and at this stage, the odds for a sustained move above this level are not that high. All in, only a break of the ‘key support’ at 1.1590 (level previously at 1.1545) would indicate that a short-term top is in place.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Still neutral, GBP has moved into a consolidation phase. No change in view.
GBP tested the strong 1.2800 support last Friday (exact low of 1.2800) before rebounding. The recovery has improved the underlying tone somewhat but it is too early to expect the start of a bullish phase. In other words, we continue to expect GBP to consolidate and trade sideways from here, albeit likely at a higher range of 1.2760/1.2960 (from 1.2700/1.2900 previously).
AUD/USD: Neutral (since 21 Aug 18, spot at 0.7335): AUD is expected to trade sideways.
There is not much to add to yesterday’s update (28 Aug, spot at 0.7330). As indicated, despite the relatively strong bounce last Friday, AUD does not appear to be ready to extend its advance in a significant manner. In other words, we expect AUD to trade sideways for now, likely within a 0.7250/0.7420 range.
NZD/USD: Neutral (since 20 Aug 18, 0.6625): NZD has moved into a higher trading range. No change in view.
NZD rebounded from a low of 0.6620 and hit a high of 0.6696 last Friday. The price action was well within our expected 0.6610/0.6760 consolidation range and at this stage, we are holding on to the same view. That said, the underlying tone has improved somewhat and the immediate bias is for NZD to probe the top end of the expected range.
USD/JPY: Neutral (since 23 Jul 18, 111.20): Rebound has scope to extend higher but 112.14 is likely out of reach.
Despite the overall positive indications, USD has not been able to make much headway on the upside as it traded within relatively narrow ranges over the past couple of days. We continue see scope for a higher USD even though the major 112.14 resistance is unlikely to come into the picture. Only a break of 110.50 would indicate that the current mild upward pressure has eased.
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