11 Oct: Forecast: FX: US$/Majors

By | October 11, 2017


Apologies for the delay today. We had server problems that meant the website was down for a few hours.

Some of the previous session highs/lows are marginally out of date now that Asia has got up and running but most are generally intact.

EURUSD: 1.1803
Preferred Strategy:  The US$ has been under steady downside pressure through much of the day culminating in a move to 1.1825 after the suspension of the Catalan independence votes and is finishing the US session just below the day’s highs. Given the lack of data today, it could be a rangebound session while waiting on the FOMC Minutes. After that it will be a pretty lean data calendar until Friday’s CPI and Retail Sales reports, which will again be viewed through the hurricane affected conditions. Technically the US$ looks as though it  is rapidly running out of steam on the upside and it is going to take a fairly hawkish FOMC minutes to put it back on its feet. The short term momentum indicators are looking quite positive, while the dailies are flattening out, so the US$ longs (me!) look to be in for a bit of pain. The neckline of the head/shoulder is now at 1.1870 and we can go to that level, but do not want to head any higher or there will be strong dollar liquidation which would see the Euro head towards 1.1900/1.2000. The downside today looks underpinned at around 1.1780/60. Overall, range trade may be the plan and then go with the flow after the FOMC Minutes or sell a rally to 1.1870 but with a tight SL, at around 1.1900.
24 Hour: Neutral Medium Term: Mildly Bearish  – Prefer to sell rallies
Resistance Support
1.1900 1.1780 Minor
1.1882 (50% of 1.2092/1.1669) 1.1755 200 HMA
1.1870 Neckline resistance 1.1738 Session low
1.1850 Minor 1.1718 9 Oct low
1.1830 (38.2% of 1.2092/1.1669) 1.1700 Minor

Economic data highlights will include:

FOMC Minutes, Speeches, Fed’s Williams/Evans

USDJPY: 112.52
Preferred Strategy:  The dollar remains rangebound within 112.00/113.00 today, having so far tested and bounced off the base (low 111.98) and similar conditions appear set to continue. As before, I think the dollar will eventually head higher, so buying dips is preferred although for the time being 112.00/113.00 looks set to cover it gain.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
113.55 Minor 112.20 Minor
113.43 6 Oct high 111.98/112.00 Session low/(23.6% of 107.31/113.43)
113.20 Minor 111.80 Minor
113.00 Minor 111.65 Minor
112.74 9 Oct high 111.46 25 Sept low

Economic data highlights will include:

Machinery Orders,

GBPUSD: 1.3200
Preferred Strategy:  Cable has had another solid session, underpinned by the strong Manufacturing/Industrial Production data, although the weak trade data tempered further gains, and is closing near session highs of 1.3225. The charts remain mixed, so a neutral stance is required but overall, with the dailies still looking heavy, selling into near term strength may be the plan.
24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
1.3292 4 Oct high 1.3175 Minor
1.3265 (38.2% of 1.3656/1.3026) 1.3145 100 HMA
1.3250 Minor 1.3130 Session low
1.3235 200 HMA 1.3100 Minor
1.3225 Session high 1.3075 9 Oct low

Economic data highlights will include:

Inflation Report Hearing

USDCHF: 0.9757
Preferred Strategy:  US$Chf broke down through the rising trend support, mentioned yesterday, and traded to 0.9735 with little bounce heading into the US close. The dailies are still positive, but may be running out of steam, and with the 4 hour charts looking heavy a retest of the lows and possibly 0.9700 would not really surprise today. In the medium term I still like the dollar higher though, eventually looking for a run towards parity. A close above the 200-DMA (0.9850) would help extend the uptrend – patience may be required! Neutral.
24 Hour: Prefer to buy dips Medium Term: Mildly Bullish  – Prefer to buy dips
Resistance Support
0.9850 200 WMA 0.9735 Session low/5 Oct low (23.6% of 0.9420/0.9836)
0.9835 200 DMA/(61.8% of 1.0099/0.9420) /6 Oct high 0.9710 4 Oct low
0.9807 9 Oct high 0.9685 Minor
0.9789 Session high 0.9676 2 Oct low (38.2% of 0.9420/0.9836) /
0.9770 Minor 0.9642 25 Sept low

AUDUSD: 0.7783
Preferred Strategy:  The Aud reached a high of 0.7796 in late Asia but is now back at 0.7780 and appears set to remain rangebound within the 0.7740/0.7800 range today. . The short term momentum indicators are neutral, but with the dailies still pointing lower, selling rallies still appears to be the plan.
24 Hour: Neutral Medium Term: Mildly Bearish
Resistance Support
0.7872 (38.2% of 0.8102/0.7732) 0.7765 Minor
0.7850 Minor 0.7749/47 Session low /9 Oct low
0.7830 200 HMA 0.7732 6 Oct low
0.7815 Descending trend resistance/(23.6% of 0.8102/0.7732) 0.7725 (50% pivot of 0.7328/0.8125)
0.7796 Session high 0.7700 Minor

NZDUSD: 0.7076
Preferred Strategy:  The Kiwi remains heavy but is holding on above its trend lows while waiting on a result from the political uncertainty following the recent election, and until that occurs (Thur?) it is likely to remain under pressure. A neutral stance is currently wise.
24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
0.7180 Minor 0.7055 Session low
0.7165 5 Oct high 0.7035 Minor
0.7145 (23.6% of 0.7434/0.7058) 0.7010 Minor
0.7118 6 Oct high 0.6990 (76.4% of 0.6817/0.7528)
0.7100 Minor 0.7970 Minor