EUR/USD: Neutral: A test of the month-to-date high of 1.0985 will not be surprising but a sustained up-move is unlikely.
We shifted to a neutral stance yesterday but expect the short-term EUR/USD strength to carry it higher to test the monthto-date high of 1.0985. At this stage, a move above this level appears unlikely. That said, EUR/USD is expected to remain underpinned in the next few days with solid support at 1.0860 followed by 1.0815.
Based on the current momentum outlook, even a break above 1.0985 is not expected to lead to a rapid run-up in EUR/USD. The next significant resistance is at December’s high of 1.055/60.
GBP/USD: Neutral: Continue to expect corrective rebound to test 1.4450.
We shifted from a bearish to neutral GBP/USD stance on Monday and were of the view that the current corrective rebound could carry this pair higher to test the 1.4450 resistance. The movement thus far is within our expectation as we saw a high of 1.4407 yesterday. The undertone remains positive and we continue to expect a move to 1.4450.
Based on the current momentum indicators, a sustained break above this level is unlikely. That said, the upward pressure will continue to build as long as GBP stays above 1.4280.
AUD/USD: Neutral: Daily closing above 0.7110 would indicate start of a sustained up-move.
In line with our recent expectation, the corrective rebound in AUD/USD finally reached 0.7110. The quick pull-back from the high of 0.7129 is not surprising but upward momentum continues to improve and a daily closing above 0.7110 would indicate a more sustained up-move towards 0.7250.
Overall, the upward pressure will continue to build unless there is a move back below 0.7005/10 in the next few days.
NZD/USD: Neutral: Likely trapped between 0.6410 and 0.6555 for now.
This week, NZD/USD tested both the key resistance at 0.6555 (high of 0.6531) and the key support at 0.6410 (low of 0.6417) but failed to break through. These key levels need to break before a sustained directional move in NZD/USD can be expected.
In other words, we remain neutral for now and this pair is likely trapped between the levels mentioned above.
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