1 Aug: Forecast: FX: US$/Majors

By | August 1, 2017


EURUSD: 1.1837
24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
The Euro has finished at session and 2 ½ year highs on Monday, with the dollar under general pressure, spiking higher and triggering stops once 1.1800 was taken out. This all means that the Euro will finish the month at trend highs –a rather bullish scenario.

Technically, having now taken out 1.1800, there is little to stop the Euro heading on towards 1.1975/1.2000, with very little resistance to stand in the way. The next Fibo level is not actually seen until 1.2165 (50% of 1.3993/1.0340). While the daily momentum indicators are overbought, hinting at a possible correction, the weekly and monthly charts are both heading firmly higher.

On the downside, near term support arrives at 1.1800 and then at the 200 WMA at 1.1785. Below there, although it currently looks unlikely, we could head back to the session low of 1.1722 and eventually to Friday’s low of 1.1670.

Preferred Strategy: Now above 1.1800, buying dips would seem the way to go. There is plenty of data due out today, but if the EU GDP and the PMIs are generally firm, then we can expect the Euro to accelerate higher. Looking to but near the 200 WMA with a SL placed under 1.1720 could be a plan.

Resistance Support
1.1996 Dec 14 low/55 MMA. 1.1800 Minor
1.1976 Jan 2015 high 1.1785 200 WMA
1.1900 Minor 1.1750 Minor
1.1870 Minor 1.1722 Session low
1.1844 Session high 1.1670 Friday low

Economic data highlights will include:

German Unemployment, EU Markit Manufacturing PMIs, EU Q2 GDP (Provisional), US Personal Spending, Consumption/Expenditure Price Index, ISM Mfg PMI/Prices Paid, Total Vehicle Sales, Construction Spending, API Weekly Crude Oil Stock Inventory

USDJPY: 110.25
24 Hour: Mildly Bearish Medium Term: Neutral
US$Jpy has remained heavy today, not helped by the Chicago Purchasing Managers Index or the White House chaos, and has traded down to a low of 110.20, after earlier reaching a high of 110.76.

The short term momentum indicators suggest that further downside pressure may be possible, and a break of 110.15/20 would then test option barriers at 110.00. The protection ahead of 110.00 should be strong, but a break would trigger stops which would allow a run to 109.80 and possibly to 109.65. Below there though could eventually see a run towards 109.25 and even to 108.80 (Weekly Cloud Base).

On the topside, minor resistance will be seen at 110.50 and then at 110.75, a break of which would open up 111.00 and Friday’s high of 111.32 although this seems unlikely to be seen today. If wrong, look for a run up towards 111.55 and then to 111.70 ahead of 111.90 (100 WMA) which should be strong resistance, if we get there.

Preferred Strategy: Neutral – possibly sell rallies above 110.70

Resistance Support
111.55 100 DMA /200 HMA 110.20 Session low
111.32 Friday high 110.15 (76.4% of 108.80/114.50)
111.00 Pivot 109.80 Minor
110.76 Session high 109.65 (76.4% of 108.12/114.50)
110.50 Minor 109.40 Minor

Economic data highlights will include:

Nikkei Mfg PMI

GBPUSD: 1.3207
24 Hour: Neutral Medium Term: Turning Mildly Bullish
Having held 1.3100 on Monday, Cable got dragged higher by the Euro and is finishing near session highs of 1.3203. The momentum indicators generally look positive for Sterling although traders are going to be wary of buying it too heavily up here ahead of Thursday’s ECB Meeting. No change to policy is generally expected despite some calls for a hike, and the MPC vote is expected to be 6-2 in favour of keeping rates on hold. Note that there is a 72 hour BOE staff strike starting today. This is not expected to halt the meeting.

The short term momentum indicators as aligned to look slightly more constructive on Tuesday, and above the session high of 1.3203, there is little to stop Cable heading to  1.3280. Above there would be increasingly bullish, possibly opening up the major Fibo pivot at 1.3420 (50% pivot of 1.5017/1.1821) although this currently remains over the horizon.

On the downside, minor support now lies at 1.3160 and 1.3120 ahead of 1.3100. Below there would open the way back to 1.3050/60 which underpinned Cable on Friday. Below there, unlikely for a while I suspect, would return to 1.3020 ahead of 1.3000.

Preferred Strategy: Look to buy at around 1.3160 for a run towards 1.3280. SL @ 1.3090.

Resistance Support
1.3340 13 Sept ‘16 high 1.3160 Minor
1.3200 Minor 1.3120 Minor
1.3278 15 Sept ‘16 high 1.3096 Minor
1.3250 Minor 1.3060 Friday low/ (23.6% of 1.2588/1.3203)
1.3203 Session high 1.3049 27 July low

USDCHF: 0.9670
24 Hour: Neutral Medium Term: Mildly Bullish
The Chf is a little firmer against the dollar on Monday, but remains under heavy pressure against the Euro, having today reached 1.1545, a new 2 ½ year high.

Against the dollar, the price action has been choppy (0.9636/0.9712) and the short term momentum indicators are mixed, suggesting that we may remain near current levels again on Tuesday, but the dailies look increasingly positive, and if 0.9720/30 can be overcome then we could see a quick run higher, to where 0.9765 and 0.9805 will provide minor resistance ahead of the 100 WMA at 0.9870.

On the downside, minor support lies at 0.9635, ahead of the 100 MMA (0.9600) which should be decent support. Below that could then revisit what may be the neckline of a reverse H/S formation at 0.9585 (objective: 0.9745), and back below there would head back to the 200 WMA at 0.9555 and then towards 0.9500

Preferred Strategy:  Prefer to buy dips at 0.9600, looking for a topside break of 0.9730. SL sub 0.9555.

Resistance Support
0.9807 30 May high/100 DMA 0.9650 Minor
0.9765 (50% pivot of 1.0100/0.9437) 0.9636/33 Session low/Friday low
0.9726 Friday high 0.9600 100 MMA
0.9712 Session high 0.9585 Neckline
0.9700 Minor 0.9555 200 WMA

AUDUSD: 0.8001
24 Hour: Neutral Medium Term: Neutral – Possibly look to buy dips.
The Aud has been dragged higher by the soft US$ and by stronger commodity prices, and is now back at 0.8000 ahead for today’s RBA Meeting, at which no change to policy is expected although the RBA are likely to try and talk the Aud lower. Traders have seen it all before though, and while the US$ remains soft dips will be eagerly sought, I suspect.

The 200 WMA (0.8000) and the MMA at 0.7975 may combine to continue to act as a magnate today, but on the downside, minor support would arrive at the session low of 0.7955 ahead of Friday’s low of 0.7936. Below here, unlikely today, could then see a run towards 0.7890/00 ahead of the strong area at 0.7875.

On the other hand, the longer term charts still hint that buying dips remains the medium term plan and if we head back above 0.8000/20, we could then see a return to the trend high of 0.8065. Above 0.8065, there is little to stop the Aud from heading to 0.8160, albeit probably not today.

Preferred Strategy: Neutral.

Resistance Support
0.8162 May 2015 high 0.7975 200 MMA
0.8065 26 July high 0.7955 Session low
0.8025 Minor 0.7936 Friday low
0.8006 Friday high 0.7890 (23.6% of 0.7328/0.8065)
0.8001 Session high /200 WMA 0.7874 21 July low /26 July low

Economic data highlights will include:                       

AIG Mfg PMI, Caixin China Mfg PMI, RBA Interest Rate Decision/Statement, RBA Commodity Index

NZDUSD: 0.7510
24 Hour: Neutral Medium Term: Neutral -Prefer to buy dips
The Kiwi is once again trading around the 0.7500 pivot, largely left out of the action on Monday, after a range of 0.7476/0.7521

The short term momentum indicators are mixed and a cautious stance is needed for Tuesday, but dips look likely to meet good demand below 0.7500, with 0.7480 and 0.7465 providing minor support. Below there, we could then see a run towards 0.7430, which should be strong support (200 WMA), where we now have had a 2nd consecutive weekly close to the topside, last seen in Sept 2014.

On the topside, the dailies still look positive, although they are becoming somewhat overbought, but the weekly charts also still suggest that further medium term gains look likely and back above 0.7525 could then revisit 0.7545 (strong: 100 MMA/55 MMA) and the 27 July high (0.7557). Beyond here, there is little resistance to stop the Kiwi from heading on towards 0.7575 and above that there is nothing to stop it heading to 0.7740/45 (April 2015 high).

Preferred Strategy: Neutral. Possibly look to buy dips.

Note that the GDT is due tonight.

Resistance Support
0.7600 Minor 0.7500 Pivot
0.7575 May 2015 high 0.7480 Minor
0.7557 27 July high 0.7467/60 Session low/Friday low
0.7545 100 MMA/55 MMA 0.7430 200 HMA /200 WMA
0.7525/21 Friday high /Session high 0.7400 25 July low

Economic data highlights will include:

Global Dairy Trade Index