Quarterly Global Outlook 4Q2015 • UOB Global Economics & Markets Research42

FX TECHNICALS

EUR/USD: 1.1250The fear of a financial crisis in late Au-gust sent EUR surging to a high of 1.1710. However, the rally was short-lived and the rapid reversal from the high suggests that 1.1710 could be an important top. While the pull-back from 1.1710 appears to have scope to extend lower to test the late July low of 1.0810, a break below this level appears unlikely. In other words, the outlook for the next few months appears mixed especially with most indicators having unwound from oversold conditions after the sharp drop to 1.0455/60 earlier in the year. Expected range for the coming quarter; 1.0810/1.1710.

USD/SGD: 1.3980Waning upward momentum coupled with overbought conditions suggests that the rally from the 1.3150 low in late April is either close to completion or has already made an interim top at 1.4296. In view of the strong USD strength over the past several months, any down-move from the high is likely a corrective pull-back and not the start of a bearish reversal. A pull-back of 50% would suggest a move to 1.3720/25 which is also close to the major trend-line support (before the lon-ger-term USD up-trend could reassert itself).

AUD/USD: 0.7180While a bottom is likely not in place just yet, severely oversold condition as well as clear and apparent bullish diver-gences suggests that AUD has limited downside risk going into the last quar-ter of the year. That said, another leg lower to 0.6700 cannot be ruled out but the next support at 0.6500 is not likely to come under threat. However, in view of the sharp depreciation that started in mid-2014, any up-move is considered as a corrective rebound and will likely strug-gle to move above the major resistance at 0.7535 (low in Apr 15).

Quarterly Global Outlook 4Q2015 • UOB Global Economics & Markets Research 43

FX TECHNICALS

GBP/USD: 1.5500 Despite generally positive undertone, GBP has failed to move convincingly higher in the last few months. The up-ward momentum accompanying the strong rally from the 1.4565 low in Apr fizzled out with the failure to break above the 1.6000 resistance (high of 1.5930). The subsequent pull-back from the high is likely part of an on-going sideway con-solidation phase. In other words, GBP is expected to trade mostly sideways in the next few months. 1.5090 is a strong support while on the upside, only a clear break above 1.5930 would indicate the start of a sustained up-move to 1.6190 (61.8% retracement of the drop from 1.7192 to 1.4565).

USD/JPY: 120.85 The price action since the 125.85 high in June suggests that the drop from the peak is part of a consolidation phase that is incomplete. Indicators have yet to fully unwind from overbought condi-tions and hence, a deeper pull-back to test the major support at 115.50 will not be surprising. Overall, USD is expected to continue to hold below 125.85 but the odds for a clear and sustained break be-low 115.50 appears to be quite slim.

EUR/SGD: 1.5970 EUR unexpectedly rocketed higher in late Aug to exceed the major 1.6400 resistance (Dec 2015 peak as well as the 61.8% retracement of the drop from 1.7670 to 1.4350) to touch a high of 1.6525. However, the rally was short-lived as EUR reversed direction and dropped sharply from the high. The down-move appears to have scope to extend lower to test the strong support at 1.5455 but a break below this level is not expected. Overall, the range for the next few months should hold comfortably within a 1.5455/1.6525 range.

Quarterly Global Outlook 4Q2015 • UOB Global Economics & Markets Research44

GBP/SGD: 2.1670 GBP surged to a fresh 5-year high of 2.2310 in the last week of August before dropping quickly to close lower resulting in a bearish reversal week. A top is likely in place at 2.2310 and the subsequent price action appears to be part of a cor-rective pull-back that has room to extend lower to test 2.1065/00 (high in February and the 50% retracement of the 1.9900 to 2.2310 rally) but a sustained break below this level is not expected. Strong resistance is at 2.2000 ahead of the key level of 2.2310.

FX TECHNICALS

AUD/SGD: 1.0050 The sharp depreciation in AUD is clearly oversold and this coupled with waning downward momentum suggests that this pair is trying to form a bottom for a recovery. However, it is too early to ex-pect a sustained rebound as the basing process may take a couple of months to form. Overall, another dip closer to 0.9700 will not be surprising and only a break back above 1.0240 would indi-cate that a bottom is in place (for a move higher to 1.0400/1.0550).

JPY/SGD: 1.1680While the sharp drop from the 1.2105 peak in late August suggests that an in-terim top is in place, the down-move is viewed as a corrective pull-back. A test of the major support at 1.1400 will not be surprising but the positive undertone is expected to lead to a rebound towards 1.2090/15 in the later part of the year.