1 Feb: Forecast: FX: US$/Majors + trade ideas

By | February 1, 2018

 

EURUSD: 1.2416
EurUsd has had a choppy session without breaking any new ground and is finishing the day near to where it starts, currently at 1.2410.
1 hour/4 hour indicators: Neutral Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  With the short term momentum indicators now in neutral a cautious stance seems wise. The longer term charts still hint that the dollar downtrend does remain intact although we may be approaching a top for the Euro and I would not be entering new longs as we approach 1.2500, particularly if US yields start to accelerate higher and outpace Bund yields. On the downside, below today’s low of 1.2388 would then allow a run back towards the 29 Jan low of 1.2335, below which there is Fibo support at 1.2305. A break of 1.2300 would then allow a move towards 1.2225.

With the daily/weekly charts still looking positive though, any weakness may be short lived and buying any dips may still be the medium term trade.  The session high of 1.2275, along with the 100 MMA/200 MMA will continue to provide stiff resistance, but above 1.2500 would then target 1.2538, beyond which would open 1.2650. In the meantime, we can probably expect a choppy session while waiting on tomorrow’s NFP, although the EU PMIs are likely to underpin the Euro today.

Resistance Support
1.2538 25 Jan high 1.2388 Session low
1.2500 (38.2% of 1.6037/1.0340) 1.2360 200 HMA
1.2475 Session high 1.2336/34 28 Jan/29 Jan  low
1.2460 100 MMA 1.2305 (23.6% of 1.1553/1.2537)
1.2425 200 MMA 1.2270 Minor

Economic data highlights will include:

EU Manufacturing PMIs, US Jobless Claims, ISM Mfg PMI/Prices Paid, Construction Spending, Total Vehicle



USDJPY: 109.10
US$Jpy is back above 109.00, assisted in part by the comments from the BOJ that the current easing policy is still required, with the FOMC having little influence in the overall direction as the dollar struggles to take out the 109.20 resistance, although it did briefly touch 109.44, before giving up those gains and heading back to safer ground by the end of the session.
1 hour/4 hour indicators: Turning higher Daily Indicators: Neutral -Turning lower – Possible basing formation. Weekly Indicators:  Neutral
Preferred Strategy:  The short term momentum indicators are still looking a little more positive and if 109.20 can be overcome then we should be able to take another look at the session high.  Beyond there, look for a run back towards 109.70/80 and possibly onto 110.20, where Fibo resistance may well cap any further gains ahead of tomorrow’s US jobs data.

The longer term charts still look heavy, although the dailies seem to be basing and if we head back below the session low of 108.59, it may be that we see a return towards the 29 Jan low of 108.40, below which would head to the 26 Jan low of 108.27. A break of this would then find little to hold the dollar up until rising trend support at 107.50 and the 2017 low at 107.32.

Allowing for a dip, the short term momentum indicators still suggest that we should be looking to buy into weakness, but with a tight SL in place.

Buy US$Jpy @ 108.60. SL @ 108.15, TP @ 106.65

Resistance Support
110.22 (38.2% of 111.38/108.27) 108.59 Session low
110.00 Minor 108.40 29 Jan low
109.76 26 Jan high 108.27 26 Jan low
109.47 (23.6% of 111.38/108.27)/200 HMA 108.00 Minor
109.44 Session high 107.70 Rising trend support


GBPUSD: 1.4188
Sterling had a choppy session, falling to 1.4121 after EU officials rejected the City of London’s Brexit blueprint for banks before rallying strongly into the London month-end fix, reaching 1.4213 and then ending the day at 1.4190.
1 hour/4 hour indicators: Turning higher Daily Indicators: Up – Possible topping formation. Weekly Indicators:  Up
Preferred Strategy:  Cable remains very choppy and is probably best left alone right now. It would seem to be roughly in a range of 1.4000/1.4300 so look to trade that, or possibly 1.4100/1.4250, with a tight 50 point stop placed either side.
Resistance Support
1.4300 Minor 1.4122 Session low
1.4287 26 Jan high 1.4090 200 HMA
1.4232 Session high 1.4035 (23.6% of 1.3039/1.4344)
1.4200 Minor 1.4000 Minor


USDCHF: 0.9310
1 hour/4 hour indicators: Turning higher Daily Indicators: Down Weekly Indicators:   Turning lower
Preferred Strategy:  As before, the longer term charts look heavy, and if the support at 0.9288, where we now have a double bottom, does get taken out we could head quickly to the August 2015 low at 0.9257, below which there is a black hole until around 0.9150.

The shorter term charts though look a little more positive though,  and on the topside, resistance will again be seen at the session high and then at 0.9380/90, a break of which could see the dollar carry on to the  26 Jan high 0.9430. Given the positive momentum of the 4 hour charts, buying dips for the next 24 hours is mildly preferred although another choppy session, waiting on tomorrow’s US jobs figure, would not surprise.

Resistance Support
0.9475 Minor 0.9300 Minor
0.9452 (23.6% of 0.9977/0.9288) 0.9288 25 Jan low /Session low
0.9430 26 Jan high 0.9257 Aug 2015 low
0.9392 29 Jan high 0.9210 Minor
0.9358 Session high 0.8180 Minor


AUDUSD: 0.8053
 AudUsd had a choppy session, and having fallen to a low of 0.8044 in the aftermath of yesterday’s CPI miss, it then managed to rally to 0.8116 before falling sharply back to the lows, reaching 0.8035 ahead of a mild bounce into the close to sit right on the 200 MMA at 0.8055. It could be a busy session ahead, with the December building approvals, the AIG Performance of Mfg Index and China Jan Caixin Mfg PMI being the data risks in Asia.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up – Becoming Overbought Weekly Indicators:  Neutral – Turning higher
Preferred Strategy:  After a choppy session on Wednesday, the short term momentum indicators are now pointing lower and if 0.8035/40 is broken it would open the chance of a run towards 0.7985 and possibly to 0.7950. While the dailies are looking rather toppish, the longer term uptrend remains intact, and back above 0.8100/15, and the recent high of 0.8135, could then see a move towards the May 2015 high. If that (0.8162) is taken out then we might expect to see a run towards 0.8200 and higher, with little resistance seen until 0.8245/90.

For today I prefer to sell into rallies but wait for the data, where strong figures could see a return towards 0.8100.

Sell AudUsd @ 0.8100. SL @ 0.8120, TP @ 0.7985

Resistance Support
0.8162 May 2015 high 0.8040/35 Rising trend support/Session low
0.8135 26 Jan high 0.8004 26 Jan low
0.8117/13 Session high  /29 Jan high 0.7985 (38.2% of 0.7502/0.8135)
0.8180 Minor 0.7956 23 Jan low
0.8055 200 MMA 0.7936 16 Jan low

Economic data highlights will include:

AIG Performance of Mfg Index, Import/Export Index, Building Permits (Dec), Caixin China Manufacturing PMI, RBA Commodity Price Index



NZDUSD: 0.7357
The Kiwi is at 0.7365 after a 0.7325/0.7419 range, having been pushed around by AudNzd flows and then by the gyrations in the US bond market..
1 hour/4 hour indicators: Neutral Daily Indicators:  Possible topping formation. Weekly Indicators:  Turning higher
Preferred Strategy:   As before, the daily charts remain positive but look increasingly toppish, and selling rallies may now be the plan, although if the US$ remains under pressure it may be better to trade it through the crosses.  Against the US$, the Kiwi needs to hold above 0.7280/90, below which would break below the rising trend support, possibly signalling that a longer term top is in place and opening the downside towards 0.7185/0.7215. On the topside, resistance will be seen at 0.7400/15, but above which could see a run back towards 0.7435. The direction of US yields will provide the overall direction, and they look to be heading higher so I would tend towards being short the Kiwi above 0.7400, but with a SL placed above 0.7450 as we could then see a run back to the July 2017 high of 0.7557.
Resistance Support
0.7434/30 20 Sept high/25 Jan high 0.7325 Session high
0.7419 Session high 0.7290 26 Jan low /Rising trend support
0.7400 Minor 0.7279 29 Jan low/(23.6% of 0.6780/0.7433)
0.7385 Minor 0.7260 Minor
0.7370 Minor 0.7235 Minor