Dollar corrections and outlooks - Westpac

Analysts at Westpac offered a snapshot of dollar trends and longevity.

Key Quotes:

"Style of USD corrections will determine the nature of new trends

•USD consolidation since late December is testing standard retracement and perceived structural levels,
•JPY rebounds may be deep but, given the extent of USD/JPY rally of 2H’17, are merely standard retracements. Notable JPY weakness should resume into 2Q’17,
•AUD is forming the “last”-legs (rebounds) of a broad consolidation. Gains could push through 0.78 to 0.80 before AUD retracing through its broad range of 2016,
•NZD is in a similar scenario of retracing its decline since 2015. Current squeezes could retest the 0.74’s before NZD sharply corrects its recent gains,
•The potential for a solid base in AUD/NZD is still to be affirmed (and favour AUD), but bias remains for a retest of 1.06,
•GBP has confirmed range resistance and is at risk of sliding through its Q4’16 range (effectively 1.20-1.28),
•EUR avoided a downside range flip and remains within a broad consolidation. Interim dips need to be contained to allow for a secondary (final) squeeze to 1.10."