A quick look at UOB’s forex technical targets.
EUR/USD: Neutral (since 21 Aug 18, 1.1485): Clear break above 1.1620 would shift focus to 1.1700.
EUR touched a high of 1.1610 last Friday, not far from the strong 1.1620 resistance highlighted in recent updates. The subsequent swift drop from the high was not exactly expected but as pointed out earlier last Friday (12 Oct, spot at 1.1590), only a break of the ‘key support’ at 1.1500 would indicate that a short-term top is in place. Until then, neutral short-term indicators could lead to a couple of days of consolidation but the overall ‘positive’ outlook is deemed as intact until 1.1500 is taken out. In other words, there is still chance that EUR could break above 1.1620 and this would suggest scope for further EUR strength towards 1.1700.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP is expected to trade sideways.
GBP eked out a fresh 3-week high of 1.3259 last Friday before plummeting to close sharply lower (NY close of 1.3152, -0.62%). Brexit headlines earlier this morning sent it tumbling further to a low of 1.3080. The break of the 1.3130 ‘key support’ indicates that last Friday’s 1.3259 high is a short-term top. While there is no change to the overall neutral outlook, the recent upward pressure has eased and GBP is expected to trade sideways to lower in the coming days, likely between 1.3000 and 1.3220 (we previously held the view GBP could extend its advance to 1.3295).
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD likely to trade within a broad range.
AUD traded in a relatively narrow range last Friday and ended the day largely unchanged (NY close of 0.7117, -0.09%). The price action reinforces our view wherein we expect AUD to trade sideways in the coming days, likely within a 0.7040/0.7200 range. Looking ahead, the current price action seems to suggest that AUD is attempting to base out but this process could take up to a few weeks.
NZD/USD: Neutral (since 20 Aug 18, 0.6625): Still neutral; NZD is expected to trade sideways. No change in view.
Despite the strong surge in NZD yesterday (NY close of 0.6527, +1.20%), we continue to view the current movement as part of a consolidation phase. In other words, NZD is expected to trade sideways within the 0.6430/0.6560 range indicated on Wednesday (10 Oct, spot at 0.6480). That said, after the sharp bounce yesterday, the prospect for a break above 0.6560 has increased but the next resistance at 0.6600 is likely strong enough to thwart any further advance in NZD (at least for another one week or so).
USD/JPY: Neutral (since 09 Oct 18, 113.10): Weakness is still viewed as a correction but scope to extend to 111.50.
USD traded in a quiet manner last Friday and registered an ‘inside day’ before closing largely unchanged (NY close of 112.19, +0.02%). While the overall outlook is deemed as neutral, the current correction in USD has scope to extend lower to 111.50. At this stage, a sustained decline below this level seems unlikely. On the upside, only a break of the ‘key resistance’ at 113.00 would indicate that the current weak phase in USD has stabilized.