EUR/USD: Bullish: Target a move to 1.1240.
EUR/USD punched through successive major resistances to touch a high of 1.1145, level not seen since October last year. The rally appears to be running ahead of itself and any extension higher is not expected to move significantly above 1.1240.
That said, any down-move is expected to encounter strong support at 1.1050 and 1.1000 would be a tough level to break from here.
GBP/USD: Neutral: Only daily closing above 1.4680 would indicate start of a bullish phase.
The corrective rebound target indicated in recent updates at 1.4565 was exceeded with an overnight high of 1.4649. The high is not far from the next major resistance at 1.4680. While the short-term undertone remains positive (unless there is a move back below 1.4490), we prefer to wait for a daily closing above 1.4680 before shifting to a bullish stance.
In other words, we are not certain that the current GBP/USD strength can be sustained in the coming days.
USD/JPY: Neutral: Expect choppy trading within a broad range.
The shift to a neutral stance yesterday was timely even though we clearly do not anticipate such a sharp drop to 117.03. In view of the extreme volatility, we believe it is too early to expect a sustained down-move at this stage. From here, we think only a clear move below the recent low near 115.95/00 would indicate the start of a bearish phase.
In the meanwhile, the elevated volatility could lead to a period of choppy trading within a very broad range.
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