10 May: Forecast: FX: US$/Majors

By | May 10, 2017


EURUSD: 1.0875

The dollar is firm at the end of Tuesday trade while the Euro remains under pressure following Monday’s spike higher after the French election result, and the pair is finishing near the day’s lows of 1.0862.

The momentum indicators now suggest that we are going to see further downside pressure in the days ahead, with both the 4 hour/daily momentum indicators both looking slightly negative. If so, once back below 1.0850, the 200 DMA will provide some support although below there would potentially allow the chart gap to close, which would take the Euro all the way back to 1.0730. On the topside, resistance will be seen at 1.0900 and then at the session high of 1.0932 although I am not sure that we see it up here again today. If wrong, we could then see a move back towards 1.1000 and Monday’s high of 1.1020, a break of which would see little resistance until the channel top at 1.1055 and then the Fibo level at 1.1070,

24 Hour: Prefer to sell rallies Medium Term: Prefer to sell rallies
                                          Resistance Support
1.1020 8 May high 1.0862 Session low
1.1000 Psychological 1.0851 (38.2% of 1.0570/1.1020) /26 Apr low
1.0950 Minor 1.0825/20 200 DMA /24 Apr low
1.0932 Session high 1.0795 (50% of 1.0570/1.1020)
1.0900 Minor 1.0740 (61.8% of 1.0570/1.1020)

Economic data highlights will include:

ECB Governor, Mario Draghi Speech, US Import/Export Index, Monthly Budget Statement

USDJPY: 113.85

US$Jpy was mostly one-way traffic on Tuesday as investors shrugged off geo-political concerns and bought the dollar all the way up from 113.15 to 114.32, with the only blip being a slight correction after North Korea posted a defiant statement over its nuclear capabilities.

Having easily taken out the supposed strong resistance offered by the 100 DMA/100 WMA, and with the daily momentum indicators pointing sharply higher, further gains would seem possible. If so, above the 114.32 high would find little meaningful resistance until we hit 115.20 and the previous trend high of 115.50.

On the downside, support will be seen at the100 DMA and the 100 WMA although there is little else to be seen until 112.80. For the time being buying dips seems to be the plan, with a SL placed below 112.80

24 Hour: Prefer to buy dips Medium Term: Mildly bullish – Prefer to buy dips.
                                         Resistance Support
115.50 10 Mar high 113.80 Minor
115.20 14 Mar high 113.50 Minor
114.90 Minor 113.25 100 WMA
114.32 Session high 113.05 100 DMA
114.00 Minor 112.82 (23.6% of 108.12/114.32)

Economic data highlights will include:

Provisional Coincident Index, Leading Economic Index (Mar)

GBPUSD: 1.2945

Cable in ending Tuesday at pretty much near flat, after a range of 1.2902/60, leaving the outlook unchanged.

The momentum indicators remain neutral today and it may be another day of consolidation in the 1.2900/1.3000 range. A break of the 8 May high (1.2988) could trigger the move to 1.3000 – last seen in September – beyond which would open the way to decent resistance levels seen at each of 1.3020, 1.3035 and to 1.3060, and then further out to where the longer descending term trend resistance currently lies at around 1.3135.

On the downside, back below the session low of 1.2900, the initial support lies at 1.2880/70, a break of which could signal a return to 1.2830 (4 May low) and possibly to 1.2800/10. Overall, the preference is to buy dips, although selling EurGbp may be a better trade.

 24 Hour: Range trade Medium Term:  Prefer to buy dips
                                         Resistance           Support
1.3120 Descending trend resistance/22 Sept high 1.2902 Session low
1.3060 (76.4% of 1.3445/1.1821) 1.2875 Minor
1.3035/30 (38.2% of 1.5018/1.1821) Weekly cloud base 1.2860 Minor
1.3020 Weekly cloud base 1.2830 4 May low
1.2985/88 55 WMA /8 May high 1.2805 26 Apr low

Economic data highlights will include:

NIESR GDP Estimate

USDCHF: 1.0075

US$Chf was one way traffic for the second successive day, reaching a high of 1.0090 and looking as though it could have further gains ahead of it although the hourly charts are overbought and we may need some consolidation, and possibly a minor dip, before any further topside progress is possible.

The 4 hour/daily momentum indicators both look constructive, and if we get above 1.0090 and then 1.0107 there is then not too much to stop the dollar heading on to 1.1070 and then towards 1.0250.  On the downside, the initial support will arrive at 1.0135 and then again at parity, ahead of further minor Fibo levels at 0.9975 and 0.9945. Buying dips still seems to be the plan, with a SL not placed below 1.0000.

24 Hour: Prefer to buy dips Medium Term: Prefer to buy dips
                                         Resistance Support
1.0200 Minor 1.0135 (23.6% of 0.9858/1.0190)
1.0170 7 Mar high 1.0000 (38.2% of 0.9858/1.0190)
1.0140 Minor 0.9975 (50% of 0.9858/1.0190)
1.0107 10 Apr high 0.9950/45 100 DMA /(61.8% of 0.9858/1.0190)
1.0090/85 Session high/(76.4% of 1.0170/0.9813) 0.9910 (76.4% of 0.9858/1.0190)

Economic data highlights will include:


AUDUSD: 0.7341

Yesterday’s soft Retail Sales took the wind out of the Aud, which eventually reached 0.7328 before finding some support, allowing a minor rally back to 0.7350.

Technically, the short term momentum indicators look a little mixed, with the 4 hour charts suggesting that we may see a minor squeeze to the topside, which, if correct, 0.7365 and 0.7380 will provide the initial targets. Beyond 0.7400, although unlikely today, would allow a move back towards 0.7415 and possibly to 0.7425 although it would take a China CPI reading above expectations (0.0%mm, 1.1%yy) to allow a strong run to the topside.

On the other hand, the dailies are pointing increasingly lower, suggesting any short term strength should be sold into. Back below the Tuesday low of 0.7328 would find little to hold the Aud up until 0.7300 and the rising trend support, at 0.7285, although this seems unlikely to be seen today. If wrong, a break of 0.7285 would see little support until 0.7160, so worth watching. Being short is still preferred, looking for a near term rally to sell into, with a SL placed above 0.7425.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
                                         Resistance                                         Support
0.7425 5 May high/8 May high 0.7330/28 (50% pivot of 0..6826/0.7835)/ Session low
0.7415 (35.2% of 0.7555/0.7328) 0.7298 (76.4% of 0.7160/0.7750)
0.7400 Minor 0.7285 Rising trend support
0.7380 (23.6% of 0.7555/0.7328) 0.7260 Minor
0.7365 Minor 0.7245 Minor

Economic data highlights will include:

WBC Consumer Confidence, China CPI, PPI

NZDUSD: 0.6900

The Kiwi has had another rangebound session (0.6880/0.6926) leaving the outlook unchanged.

The momentum indicators still look mixed so further consolidation near current levels would not really surprise on Wednesday. If we do head higher, look for targets, once again at 0.6925, 0.6945/50 and then at 0.6970, which may not be a bad sell area if we get there.

On the downside, support will be seen at 0.6880 and then again at 0.6860. Further out, below the 4 May low would find Fibo support at around 0.6805, and below that would then allow a move to 0.6780 and eventually lower. Being short AudNzd may still be a decent play.

24 Hour: Prefer to sell rallies Medium Term: Cautiously bearish
Resistance Support
0.7000 (76.4% of 0.6868/0.6838) 0.6880 Session low
0.6980 Minor 0.6860 5 May low
0.6970/68 (61.8% of 0.6868/0.6838) /3 May High 0.6838 4 May low
0.6945 (50% of 0.6868/0.6838) /8 May high 0.6803 (50% pivot of 0.6347/0.7485)
0.6926 Session high 0.6780 (61.8% of 0.6125/0.7485)

Economic data highlights will include:

Electronic Card Retail Sales