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

By | November 1, 2017


EURUSD: 1.1645
Preferred Strategy:  EurUsd is steady today after a tight range (1.1624/60), leaving the technical outlook unchanged, and it appears likely to stay that way until the US session when the ISM, ADP and the FOMC  Statement will provide the direction.

Ideally the Euro should hold below 1.1670, this being the 100 DMA and the neckline of the head/shoulder formation, but a topside break would trigger stops and could see a run back to 1.1700+. The 4 hour charts still suggest that this is a possibility so I would be cautious but overall as long as we don’t see a daily close above 1.1700, I prefer to trade from the short side. In the longer term, with the head shoulder trade now fully in play, the target is at around 1.1250, and with the longer term momentum indicators pointing lower I still think we will head in this direction, and to add to the position into any near term strength. Back below 1.1600 will find strong support at 1.1575 and then again at 1.1510.

Sell EurUsd @ 1.1670 & @ 1.1700. SL @ 1.1730, TP @ 1.1500.

24 Hour: Prefer to sell rallies Medium Term: Bearish
FX Charts Position: Short  – Looking  to add to the position into strength
Resistance Support
1.1745 200 HMA 1.1624 Session low
1.1725 (50% of 1.1879/1.1574) 1.1593 30 Oct low
1.1690 (38.2% of 1.1879/1.1574) 1.1574 27 Oct low
1.1670 100 DMA/H.S. Neckline 1.1550 Minor
1.1660 Session high 1.1510 Rising trend support/(38.2% of 1.0570/1.2091)

Economic data highlights will include:

Partial EU Holiday, US ISM Manufacturing PMI/Prices Paid, Construction Spending, ADP Jobs data, EIA Crude Oil Stocks Weekly Change, FOMC Meeting, Total Vehicle Sales

USDJPY: 113.63
Preferred Strategy:  Having tested the support at 113.00, US$Jpy has taken on a bid tone after the BOJ left policy unchanged, and then helped higher after some solid US data. The pair is ending the day at near session highs ahead of what could be a busy session and run-in to the weekend, likely to be driven by the ADP, ISM & Tax plan today, the Fed chair call, Thursday and the NFP/jobs data, Friday.

Technically, the momentum indicators look mixed/flat, so a fairly nimble stance is required. On the downside, support will be seen at the session low (112.95). A sustained break of 113.00 would see us back in the previous 112/113 range, where 112.75 would be the first level of support ahead of 112.30. On the topside, back above 113.70 would find offers at 113.85 and again at 114.00. Above there, minor resistance will be seen at 114.20/25, above which 114.45/50 is an increasingly strong hurdle to overcome. There are some big option expiries at 114.00/114.50 coming up over the next couple of days so I do not really see the dollar much above 114.50 but if wrong look for a run up to 115.00

24 Hour: Neutral Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
114.49 11 July high/27 Oct low 113.25 Minor
114.20 Minor 112.95 Session low
114.00 Minor 112.75 (23.6% of 107.31/114.44)
113.83 30 Oct high 112.30 19 Oct low
113.72 Session high 112.00 Minor

Economic data highlights will include:                                                                       

Nikkei Mfg PMI

GBPUSD: 1.3281
Preferred Strategy: Cable stole the headlines on Tuesday, rallying to 1.3289 on the back of the stepped up Brexit timetable and the rising BoE interest rate outlook.

The daily momentum indicators looking flat, further choppy trade could be in store in the medium term but, with the short term momentum indicators looking positive I prefer to lean towards the upside.

Above the session high of 1.3289, resistance will arrive at 1.3300/10, above which could then see a squeeze towards 35/40 – and above that there is little to stop Cable heading to 1.3400+.

On the downside, support will be seen at 1.3270, below which could see a move to 1.3235, at which point it may be worth buying it. I am still long GbpAud and think there is plenty of upside ahead – looking for 1.82.

Watch out for today’s UK Mfg PMI and MPC member Cunliffe, who will be speaking.

24 Hour: Neutral – Mildly Bullish? Medium Term: Neutral
FX Charts Position: GbpUsd -Flat; (Long GbpAud)
Resistance Support
1.3415 (61.8% of 1.3656/1.3026) 1.3270 100 WMA
1.3375 Minor 1.3255 Minor
1.3337 13 Oct high/(50% pivot of 1.3656/1.3026) 1.3235 (23.6% of 1.3069/1.3288)
1.3310 16 Oct high 1.3205 (38.2% of 1.3069/1.3288)
1.3288 Session high 1.3080 200 HMA

Economic data highlights will include:                                                                


USDCHF: 0.9973
Preferred Strategy: US$Chf has had a narrow range on Tuesday; albeit with a mildly bid tone, but so far unable to regain parity. More of the same could be in store with any action likely to be driven by the US data later in the day.

On the downside, support will be seen at yesterday’s lows of 0.9938, and for the time being it looks as though a top may remain in place at Friday’s 1.0037 high. A move to below the 0.9940 low would find support at 0.0.9920 and then at 0.9900 and at 0.9875.

As before though, with the dailies still looking positive I suspect that the dollar will eventually take another look at parity and at 1.0035/40 and beyond, where the next major level is seen at 1.0099.

For now, look for the dollar to chop around current levels, but with the view of buying dips for an eventual return to parity and above.

Buy US$Chf @ 0.9940. SL @ 0.9990, TP @ 1.0070

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish  – Prefer to buy dips
FX Charts Position: Long
Resistance Support
1.0099 11 May high 0.9960 Minor
1.0075 Minor 0.9941 Session low
1.0037 27 Oct high 0.9920 Minor
1.0000 Psychological 0.9890 (23.6% of 0.9420/1.0037)
0.9994 Session high 0.9868 67 Oct low

AUDUSD: 0.7655
Preferred Strategy: AudUsd remains under pressure on Wednesday, not helped by higher US Treasury yields or by Iron Ore Prices which slipped by 2% yesterday. The session low so far has been 0.7639, but that seems set to come under further pressure today, which will happen if the Australian/Caixin China Mfg PMIs come in below expectations.

Trading from the short side remains favoured, looking for another run towards last Friday’s lows of 0.7625 and eventually towards 0.7570. On the topside, the neckline of the head/shoulder formation combined with the 100 DMA to halt any move above 0.7700. This looks unlikely to be visited again today and I would be surprised to see the pair trade much above 0.7670.

Sell AudUsd @ 0.7670. SL @ 0.7710, TP @ 0.7575

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position:    Short  – Looking  to add to the position into strength
Resistance Support
0.7740 (23.6% of 0.8102/0.7624) 0.7639 Session low
0.7715 Minor 0.7630 (61.8% of 0.7328/0.8124)
0.7698 Session high 0.7624 27 Oct low
0.7690 200 DMA 0.7600 Minor
0.7675 100 HMA 0.7571 7 July low

Economic data highlights will include:              

AIG Manufacturing PMI, RBA Commodity Index, Caixin China Mfg PMI

NZDUSD: 0.6846
Preferred Strategy: The Kiwi traded sideways of Tuesday (0.6830/81), allowing the short term momentum indicators to unwind their oversold status.

The dailies are still negative, and as before, trading from the short side and selling rallies seems to be the plan. On the downside, a move back below 0.6830 would find strong support at 0.6817, where we have a double bottom with the May low. Below that though would then find that there is little support ahead of 0.6670 although I don’t think we make new lows today – at least ahead of the US session. The short term momentum indicators look mildly positive, and as with yesterday, resistance will be seen at 0.6885/0.6910, and selling into rallies is preferred. NZ Q3 Unemployment is coming up shortly and will likely provide some short term volatility (exp 4.7%, Change +0.8%, PR 70.2%).

Sell NzdUsd @ 0.6900. SL @ 0.6940, TP @ 0.6815.

24 Hour: Mildly Bullish – Prefer to sell rallies Medium Term: Bearish
FX Charts Position: Flat
Resistance Support
0.6970 (38.2% of 0.7210/0.6817) 0.6832/30 30 Oct low /Session low
0.6935 Minor 0.6817 11 May low/27 Oct low
0.6910 (23.6% of 0.7210/0.6817) 0.6800 Minor
0.6881 Session high 0.6760 Minor
0.6855 100 HMA 0.6720 Minor

Economic data highlights will include:

NZ Unemployment, Labour Cost Index