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

By | May 1, 2018


EURUSD: 1.2075
The dollar made further gains on Monday, assisted by the weak German Retail Sales which did not help the Euro, and firm US GDP/PCE figures, in reaching 1.2063 but holding above Friday’s low of 1.2055.  It is an EU holiday today so should be quiet although the  ISM Mfg PMI is due later in the day.
1 hour/4 hour indicators: Mixed. Daily Indicators: Down Weekly Indicators:  Turning lower.
Preferred Strategy:  The short term momentum indicators look somewhat neutral today although the dailies look heavy and the Euro does seem to have further losses ahead. With today being a Europe-wide holiday it may be a quiet session, but if we do see further Euro weakness, then below 1.2050 would open the way to 1.2030 which should also be strong support. A break of 1.2030 would allow for 1.2000/05 where the 200 DMA lies, again a strong support level but below which could see an acceleration to 1.1915/30 and event to long term rising trend support, currently at 1.1880.

On the topside, resistance will be seen at 1.2100 and at the Monday high of 1.2138, which seems unlikely to be bothered today. If wrong, look for offers at 1.2150 ahead of the chance of further gains to 1.2185/1.2200. I doubt we see it above here for a while now but if wrong look for a squeeze back towards 1.2215, which should be solid resistance if we see it. Sell rallies.

Sell EurUsd @ 1.2120. SL @ 1.2170, TP @ 1.2000

Resistance Support
1.2215 (38.2% of 1.2475/1.2055)/100 DMA 1.2063 Session low
1.2185 Minor 1.2050//54 (50% of 1.1553/1.2555) /Monthly Tankan//27 Apr low
1.2152 (23.6% of 1.2475/1.2055) 1.2030 (23.6% of 1.0340/1.2555)
1.2138 Session high 1.2000 200 DMA
1.2100 Minor 1.1960 Minor

Economic data highlights will include:

EU Holiday – Labour Day, US Markit Mfg PMI, ISM Mfg PMI

USDJPY: 109.30
US$Jpy was choppy  again on Monday, with liquidity thin due to the Golden Week holiday, but with the dollar unable to make further gains because US yields are heavy with the 10-yr yields down to 2.934% from 3.035% peak last week. Today’s range of 109.00/45 may well cover it again on Tuesday. Nikkei Mfg PMI today.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  While it may be a quiet session ahead, the daily and weekly momentum indicators look positive for further gain. The short term charts still appear to be turning a little lower though, so we may be in for further consolidation ahead of tomorrow’s FOMC Meeting.

On the downside, buyers will again be seen today at 108.95/00, which should be reasonable support, and then at 108.80 ahead of the 24 April low of 108.53, although that remains someway off, and trading from the long side is again preferred; today looking for dips towards 108.80/50, with a SL placed under 108.40

A move above the current trend high of 109.52 would find offers at 109.65, which should be strong resistance if we see it, and then at 110.00 ahead of 110.25, which should also be strong if/when we get there. Further out, as we said before, note the reverse SHS formation, with the neckline at 107.85,  suggests a target at somewhere near 110.70.

Buy US$Jpy @ 108.65. SL @ 108.40, TP @ 109.65

Resistance Support
110.25 200 DMA /(61.8% of 114.73/104.60) 109.00/108.96 100 DMA /27 Apr low /Session low
110.00 Minor 108.78 25 Apr low
109.65 (50% of 114.73/104.60) 108.53 24 April low
109.52 27 Apr high 108.35 (23.6% of 104.60/108.52)
109.44 Session high 108.00 Minor

Nikkei Mfg PMI

GBPUSD: 1.3758
Cable once again remained under pressure on Monday, but recovered from its new trend low of 1.3712 to finish the day at 1.3765, with the near term charts looking a little more positive at the end of the day. The Rudd resignation was a weight on Cable as May’s leadership is called into question once again, and this would seem set to remain in place for a while to come. Internal Tory dissent is not going to be a winner for Sterling.
1 hour/4 hour indicators: Turning higher Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   While the short term momentum indicators now look a bit more positive, the long term charts look increasingly heavy and another test of the long term rising trend support, currently at 1.3710, would not surprise in the days ahead. A break of 1.3700 would find minor bids at 1.3660 although there really is not too much to prop it up ahead of the 200 DMA, currently at 1.3525.

On the topside, near term resistance will be seen at 1.3800 and then at 1.3840 although that seems some way off, but further offers should arrive in the 1.3875/00 area which should be a decent sell if we get there with a SL placed above 1.3950.

Selling near term rallies seems to be the plan. UK Mfg PMI today.

Resistance Support
1.3900 Minor 1.3740 Minor
1.3875 100 DMA 1.3711/12 1 March low/Session low
1.3868 (23.6% of 1.4376/1.3712) 1.3700/05 Rising trend support /Weekly Kijun
1.3840 Minor 1.3680 Minor
1.3800 Minor 1.3660 Minor

Economic data highlights will include:                                                                                        

UK Mfg PMI, Consumer Credit – Mar

USDCHF: 0.9909
US$Chf, having traded in heavy fashion early in the day, was then underpinned by the soft German Retail Sales and made its way back to Friday’s peak at 0.9920, Currently at 0.9900, the next meaningful events will be Wednesday’s FOMC statement the next events before the NFP Friday and with today being an EU/Swiss holiday it could be a quiet session.
1 hour/4 hour indicators: Neutral Daily Indicators: Up Weekly Indicators:   Up
Preferred Strategy:  While the medium term indicators still look positive for further gains there is no change to the view of trading from the long side. If so, above back beyond 0.9920 could see a run back 0.9935 and then to 0.9975/1.0000 albeit probably not today.

On the downside, support will be seen at the session low of 0.9870 but a break of which, further bids should arrive at 0.9845/50 and at 0.9815 ahead of 0.9800 and 0.9780.

I don’t think we see too much today, being a holiday, but leaving a low bid, just in case, could be a plan.

Buy US$Chf @ 0.9830. SL @ 0.9770, TP @ 0.9930.

Resistance Support
1.0000 Psychological 0.9871 27 Apr low /Session low
0.9977 8 Dec high 0.9840 Minor
0.9934 15 Dec high 0.9815 26 Apr low
0.9919/20 27 Apr high /Session high 0.9780 100 DMA /25 Apr low
0.9900 (61.8% of 1.0037/0.186) 0.9767 24 April low

Economic data highlights will include:                                                                                        


AUDUSD: 0.7530
The Aud had a steady slide lower on Monday and found a new trend/2018 low of 0.7525, pretty much where it currently sits, ahead of today’s RBA meeting. No change to policy is expected and it will be the statement that is in focus. In particular, traders will be keen to see whether Governor Lowe will indicate that the RBA is cutting its 2018 GDP forecast. The forecasts will be released in the quarterly Statement on Monetary Policy on Friday, with the RBA expected to lower its growth forecast from 3.25% to 3.0%.
1 hour/4 hour indicators: Turning lower Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators are heavy although the hourlies do show a hint of bullish divergence, so some caution is warranted ahead of the RBA due later on this afternoon.

If we do see a squeeze higher, resistance will be seen at 0.7550 and then again at 0.7580/90, which should be strong, ahead of 0.7600/05 and then at 0.7620. Further out, above 0.7620 would allow a return to 0.7635/40 although this looks rather doubtful to be seen again for a while and selling rallies is preferred.

The longer term charts remains heavy, and the Aud$ would seem to have further losses to come in the days ahead although the Fibo levels at 0.7530/20 will remain decent support for now. A break of this would then head towards the early December low of 0.7501, below which would open the way to much lower levels, with little support seen ahead of the 1 June 2017 low at 0.7371.

Sell AudUsd @ 0.7565. SL @ 0.7610, TP @ 0.7475

Resistance Support
0.7620 24 April high 0.7530 (61.8% of 0.7160/0.8135)
0.7605 25 Apr high 0.7525 Session low
0.7592 (23.6% of 0.7813/0.7531) 0.7519 (76.4% of 0.7328/0.8135)
0.7588/83/81 26 Apr high /27 Apr high /Session high 0.7501 8 Dec low
0.7550 Minor 0.7470 Minor

Economic data highlights will include:

AIG Performance of Mfg Index, Building Permits, RBA Interest Rate Decision /Statement, Commodity Index

NZDUSD: 0.7034
 The Kiwi had another tough day in trading at 2018 lows of 0.7033, where it currently sits o decent Fibo support, but looking increasingly heavy. The RBA outcome will see some volatility in the Kiwi via the cross, which currently looks a little heavy. GDT due in London session.
1 hour/4 hour indicators: Neutral Daily Indicators:  Down Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look a bit mixed on Tuesday, although the hourlies are hinting at some minor bullish divergence. If we do see a squeeze higher, the Kiwi needs to break the minor double top at 0.7095 (Thur/Fri highs) above which would allow for a return to the initial Fibo resistance at 0.7115.  Above there, minor resistance at 0.7130 lies ahead of further minor levels although there is not too much to stop a return to 0.7170 (23.6% of 0.7395/0.7033)

On the downside, support will be still seen at 0.7030, an important Fibo level, but below which would open the way to 0.7000. Below 0.7000 there is not much to hold the Kiwi up ahead of 0.6935 (76.4% of 0.6780/0.7438) and then 0.6915, long term rising trend support, which is where I think we are eventually heading.

Sell NzdUsd @ 0.7070. SL @ 0.7120, TP @ 0.6970

Resistance Support
0.7115 (23.6% of 0.7395/0.7033) 0.7030/33 (61.8% of 0.6780/0.7438)/Session low
0.7105 Minor 0.7015 Minor
0.7094/88 26 Apr high/27 Apr high  //Session high 0.7000 Minor
0.7070 Minor 0.6980 Minor
0.7050 Minor 0.6953 20 Dec low

Economic data highlights will include:

Building Permits – Mar, Global Dairy Trade Index