American traders are back after the long Labor Day weekend and after a calm Monday. What levels should we look out for?
Here is their view, courtesy of eFXdata:
EUR/USD:Â Neutral (since 21 Aug 18, 1.1485): EUR could drift lower but any weakness is viewed as part of a consolidation range.
EUR rebounded slightly after touching a low of 1.1582 yesterday. We continue to view last week’s 1.1733 peak as a short-term top and expect this level to remain intact for the next one week or so. The sharp decline from last Friday has room to extend lower but at this stage, we view any weakness as part of a 1.1520/1.1675 consolidation range and not the start of a sustained down-move.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP to trade sideways to slightly lower.
We indicated yesterday that last week’s high of 1.3043 is likely a short-term top and expected GBP to trade sideways to ‘slightly lower’. That said, the relatively large drop of -0.68% by end of NY (close of 1.2872) was not exactly expected. For now, we continue to hold the same view but it appears that GBP could trade at a lower range than the 1.2800/1.3010 currently expected.
AUD/USD: Bearish (since 03 Sep 18, 0.7185): Bearish but mindful of the long-term 0.7145/60 support zone. We turned bearish on AUD yesterday and there is no change to the view (see an update from yesterday below).
While we indicated last Friday (31 Aug, spot at 0.7265) the “the year-to-date low of 0.7203 appears to vulnerableâ€, the manner of which AUD sliced through this strong support was not exactly expected as it plummeted to a low of 0.7177. The break of key support coupled with the rapidly improving downward momentum suggests that the 2-weak neutral phase has ended. While we hold a bearish AUD view now, we are mindful of the long-term support zone of 0.7145/60, being the low in 2017 as well as the 10-year rising trend-line support (visible on the monthly chart). Such strong levels may not yield so easily, at least not on the first attempt. In order to maintain the current momentum, AUD has to stay below 0.7260 as a break of this ‘stop-loss’ would indicate that AUD has made a short-term bottom. Looking further out, a break of 0.7145 would shift the focus to 0.7100.
NZD/USD:  Neutral (since 20 Aug 18, 0.6625): NZD is expected to grind lower to 0.6545. No change in view.
The rapid pace and extent of a pull-back from last week’s 0.6728 peak was not exactly expected. However, it is too early to anticipate a sustained decline even though the weakened underlying tone suggests NZD could grind lower towards the year-to-date low of 0.6545. The odds for a break of this level are not high at this stage but would continue to improve unless NZD can move back above the 0.6675 ‘key resistance’
USD/JPY: Â Neutral (since 23 Jul 18, 111.20): USD has moved back into a consolidation phase.No change in view.
There is not much to add to last Friday’s (31 Aug, spot at 111.05) update. We continue to view the current movement as part of a neutral consolidation phase and expect USD to trade sideways for now, likely between 110.35 and 111.80.
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