EUR/USD: Shift from neutral to bearish. target a move to 1.0950
We have highlighted several times in recent updates that a daily closing below 1.1120 would shift the outlook for EUR to bearish. The condition was met yesterday as EUR dropped sharply in overnight trading and is currently hovering around the next major support near 1.1040/45 (minor low in early August & rising trend-line support). Based on the current momentum, a move below this level would not be surprising and would shift the focus towards 1.0950 followed closely by the 1.0910 low seen on the day of Brexit. If the current price action is a ‘valid break’, any short-term recovery should be shallow and should not move back above 1.1140/45.
GBP/USD: Bearish: Next support at 1.1500
There is no change to the view wherein the current GBP weakness could revisit 1.1500. That said, this level seems rather far at this stage and may not be seen so soon. Overall, only a move back above 1.2470 (adjusted from 1.2610) would indicate that the current bearish phase in GBP has ended
USD/JPY: Bullish: Increasing risk of a short-term top. [No change in view]
The pair dipped to a low of 102.78 early this week. While the downward pressure appears to have eased with the subsequent Recovery, USD/JPY has to punch above the major 104.15/30 resistance or the risk of a short-term top could not be ruled out just yet.
AUD/USD: Neutral: Bearish if daily closing below 0.7510.
AUD dipped below the lower end of the expected sideway consolidation of 0.7550/0.7710 yesterday (low of 0.7533). The underlying tone has deteriorated but only a daily closing below 0.7510 would indicate that the current neutral phase has shifted to bearish. All in, AUD has to move and stay above 0.7600 within these 1 to 2 day or the downward pressure would continue to grow.
NZD/USD: Bearish: Next support at 0.7010.
NZD continues to surprise us by not only taking out the 0.7110 support but extended its decline and edged below the major level of 0.7050 (overnight low of 0.7048). While the decline is very over-extended now, only a move back above 0.7160 (adjusted from 0.7205) would indicate that the current bearish phase has ended. Otherwise, another leg lower towards the next major level of 0.7010 could not be ruled out just yet (0.7010 is the rising trend-line support connecting the two major lows seen in January and May).
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