EUR/USD: Bullish: Strong rally has scope to extend to 1.1200.

While the ‘bearish outside day’ registered yesterday does not bode well for our current bullish view, the price action is deemed as part of a short-term consolidation phase and not the start of a reversal. That said, upward momentum has clearly been dented and it may take a few days before we see the next push higher to 1.1200. On the downside, an unexpected break below the stop-loss at 1.1045 would indicate the start of a deeper pull-back (likely to below 1.1000). In the meanwhile, those who are long may likely to consider reducing their position on any move to 1.1170.

GBP/USD: Neutral: In a 1.2850/1.3050 range.

We indicated yesterday that the “immediate pressure is on the upside even though 1.3030 is expected to offer solid resistance”. GBP hit a high of 1.3048 before staging a ‘flash crash’ to a low of 1.2888. The subsequent swing higher has resulted in a mixed outlook and we prefer to continue to hold a neutral stance and expect this pair to trade choppily in the coming days, likely within a broad 1.2850/1.3050 range.

AUF/USD: Neutral: Rebound has room to extend to 0.7480/85.

We have held the same view since Tuesday (16 May) wherein we believe the recovery from the 0.7329 low seen earlier last week has room to extend higher to 0.7480/85. AUD touched a high of 0.7468 yesterday before easing off quickly. As long as the key support at 0.7370 continues to hold, the prospect for another attempt towards 0.7480/85 still appears to be quite good. A clear break above this level would indicate that AUD has moved into a bullish phase.

NZD/USD: Neutral: Back in a 0.6850/0.6950 range.

The recent buildup in upward momentum has fizzled out with the sharp and swift drop from a high of 0.6952 yesterday. The key 0.6970 resistance was unthreatened and from here, it seems likely that NZD has moved back into a 0.6850/0.6950 consolidation range.

USD/JPY: Bearish:Decline oversold but room for extension to 110.10.

We just turned bearish USD yesterday and held the view that the oversold decline has room to extend lower to 110.10. USD touched a low of 110.21 before staging a strong rebound. As indicated, the reward to risk ratio is not attractive but further USD losses is not ruled out until 111.90 is taken out. That said, the low 110.21 is acting as a solid support now and those who are short should consider booking some profit ahead of this level.

Source: United Overseas Bank Global Economics & Markets Research