11 Apr: Forecast: FX: US$/Majors

By | April 11, 2017


EURUSD: 1.0595

While the dailies remain negative, the short term momentum indicators are turning to point a little higher today, with the 4 hour charts showing a degree of bullish divergence, so some caution is warranted on the downside. If so, on the topside, above the session high of 1.0606, minor resistance lies at 1.0630 and comes ahead of minor Fibo resistance at around 1.0650. Beyond here, we could see another squeeze back the 7 Apr high of 1.0666, to the 5/6 Mar high of 1.0683/88 and to the 31 Mar high of 1.0701. The daily momentum indicators still look negative, suggesting further losses ahead at some stage. The session low of 1.0570 will provide the initial support, but below there could then see a run towards the Fibo level at 1.0555 and then towards 1.0525 and to the March double-bottom lows seen at 1.0494.

As before, selling rallies is preferred, with a SL placed above 1.0685 but looking for a run towards 1.0500 and eventually lower. Given the lack of any major data today, it could be rangebound, unless politics intervenes. Note that the daily cloud top/bottom is at 1.0615/1.0585, which may cover it again today although for the next few hours a minor topside squeeze would not surprise. The ZEW and EU Industrial Production will be minor risk factors today.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
                                          Resistance Support
1.0701/1.0695 31 Mar high/ (38.2% of 1.0906/1.0570) 1.0570 Session low
1.0683/88 6 Mar high/5 Apr high 1.0555 (61.8% of 1.0340/1.0906)
1.0666 7 Apr high)/200 HMA 1.0525 9 Mar low
1.0648 (23.6% of 1.0906/1.0570 1.0500 Minor
1.0630 Minor 1.0494 22 Feb/2 Mar low

Economic data highlights will include:

German/EU ZEW Economic Sentiment Survey,  EU Industrial Production, US NFIB Business Optimism Index,  API Weekly Crude Oil Stock Inventory

USDJPY: 110.85

US$Jpy made it up to 111.58 on Tuesday, forming a double top with the 3 April high, before reversing to a low of 110.80, with some safe haven demand being seen, particularly against the Euro , which saw some sales on the crosses after e the release of the French election poll.

Once again, a fairly neutral stance is again required, with the daily charts still showing little hint in either direction. The 4 hour charts are also flat, so we could see similar sort of session on Tuesday. On the topside, another test of 111.35 is possible above which would find decent sellers at 111.58, and as with yesterday, I would be a little surprised to see it above here today. If wrong, then above 111.60 could see a squeeze back to 112.00 ahead of the 112.15/20 area, and beyond that, look for a move beyond 112.20 towards 112.75. On the downside, the initial support will be seen at 110.80 and then at 110.40, which comes ahead of the strong 110.10/00 level. Below there, unlikely today, would open the way to 109.85, and potentially to 109.50. Look for the recent range of 110.50/111.50 to hold today.

24 Hour: Neutral – Possible range trade Medium Term: Neutral
                                         Resistance Support
112.15/19 (38.2% of 115.50/110.10) /31 Mar high 110.80 Session low
112.00 Minor 110.40 Minor
111.58 Session high/3 Apr high 110.10/12 200 WMA / 27 Mar low/7 Apr low
111.35 Weekly cloud top 109.87 (50% pivot of 98.94/118.68)
111.00 200 HMA 109.50 Minor

GBPUSD: 1.2418

Sterling is slightly firmer today, underpinned by some buying in the cross (EurGbp) after the release of the French election poll

Technically, the momentum indicators remain flat. On the downside, below the session low of 1.2365 could see Cable head towards 1.2335 and then to the minor Fibo levels which lie at 1.2300 and at 1.2230 although this is some way off.  Further out, if Sterling does see an acceleration to the downside, we could see a run towards the rising trend support line from the October, flash-crash low, currently at 1.2110 – still some way off, but the base of a large triangle formation seen on the daily charts. On the topside, minor resistance will be seen at the day’s high of 1.2428 and then at 1.2450 and at the 7 Apr high of 1.2477 although this seems unlikely to be seen today. If wrong, further gains could see a run back towards 1.2500/05 and then on 1.2555. As before, standing aside and letting the market do the work seems prudent while the Brexit confusion persists. The CPI will be in focus today (exp 0.3% mm, 2.3% yy).

24 Hour: Neutral Medium Term: Neutral
                                         Resistance           Support
1.2557 31 Mar high 1.2365 Session low
1.2505 6 Mar high 1.2363 (50% of 1.2108/1.2615)
1.2477 7 Apr high 1.2338 20 Mar low
1.2455 200 HMA 1.2300 (61.8% of 1.2108/1.2615)
1.2428 Session high 1.2227 (76.4% of 1.2108/1.2615)

Economic data highlights will include:


USDCHF: 1.0081

US$Chf made it up to 1.0107 on Monday before retiring a little, to sit back near 1.0100 at the end of the session.

The dailies still look constructive so if the dollar can make further gains, then above the session high could then head on towards 1.0140 and 1.0175. As with EurUsd, the short term momentum indicators are looking as though the dollar may be a little toppish, and on the downside, below the session low of 1.0074 could potentially allow a return to  Friday’s spike low of 1.0028, which would  provide minor bids ahead of stronger support which lies at the 1.0000/10 level. Back below parity, minor support lies at 0.9990 and at 0.9960. Once again, buying dips seems to be a plan, possibly towards 1.0050, with a tight SL placed under parity.

24 Hour: Prefer to buy dips Medium Term: Neutral – Mildly Bullish
                                         Resistance Support
1.0200 Minor 1.0074 Session low
1.0170 7 Mar high 1.0028 7 April low
1.0138 10 Mar high 1.0011/10 5 Apr low/4 April low
1.0111 13 Mar high 0.9994 31 Mar low /(38.2% of 0.9818/1.0104)
1.0107 Session high 0.9948 30 Mar low

AUDUSD: 0.7502

The Aud has been under some mild pressure for much of the session in falling to a 3 month low of 0.7475, before climbing back to 0.7500 as the US$ came under some mild pressure of its own towards the end of the day.

The 4 hour charts now look slightly more positive and hint at a minor squeeze to the topside, allowing the charts to unwind their mildly oversold condition. If so, above the day’s high of 0.7508, we could then see a move towards 0.7525 and then at 0.7545, which if seen would seem to be a decent sell area, with a SL placed above 0.7585.

Having broken, and closed, below the 100 DMA at the end of last week, which has since capped the price action on Monday, a continuing heavy bias would seem the most likely outcome as the week progresses. If so , below 0.7475  could then head towards support at 0.7450/55, which should be strong, but a break of which would then find support  at 0.7515, but then there is little to hold the Aud up until we reach 0.7385 (61.8% of 0.7160/0.7749) . NAB Business Conditions/Confidence today.

24 Hour:  Mildly bearish  – Prefer to sell rallies Medium Term: Mildly bearish
                                         Resistance                                         Support
0.7586 5 Apr high/200 HMA 0.7475 Session low
0.7576 6 Mar high 0.7455/50 (50% of 0.7160/0.7749) /Daily cloud base
0.7545 7 Apr high/200 DMA 0.7415 100 WMA
0.7525 Minor 0.7400 Minor
0.7508 100 DMA 0.7385 (61.8% of 0.7160/0.7749)

Economic data highlights will include:

NAB Business Conditions/Confidence

NZDUSD: 0.6962

The Kiwi headed down to 0.6920 on Monday, a 1 month low, before correcting to finish the day at session highs at 0.6960, with selling of AudNzd seeming to underpin it.

The 4 hour indicators are now flat, and a sideways session would not really surprise, using the current level as a pivot. At the same time the dailies retain a negative bias and seem on the verge of heading lower, so selling into strength is again the plan from a structural standpoint. The topside will now find decent resistance at 0.6980, which may possibly cap it for the coming session, but a break of which would then allow a run back towards 0.7000 and above. On the downside, 0.6930 will again act as minor support on Tuesday, below which would find decent bids at 0.6915/20 but a break of which would open the way to 0.6900/0.6890, and lower.  As for Tuesday, I prefer to be short and to sell into strength, towards 0.6980, with a SL placed above 0.7000.

24 Hour: Prefer to sell rallies Medium Term: Prefer to sell rallies
Resistance Support
0.7048 28 Mar high 0.6920 Session low
0.7021 4 April high 0.6915 Weekly Cloud Base
0.6993 7 Apr high 0.6889 9 Mar low
0.6980 200 HMA  / Descending trend resistance 0.6857 26 Dec low
0.6965 Session high 0.6820 Minor

Economic data highlights will include:

T: Electronic Card Retail Sales