12 May: Forecast: FX: US$/Majors

By | May 12, 2017


EURUSD: 1.0861

The Euro is more or less flat on the day after having bounced sharply off a new short term low of 1.0838, and with the short term momentum indicators looking mixed we could be in for further choppy trade on Friday although the US Retail Sales and CPI could produce some volatility.

Although the hourly/4 hour momentum indicators are telling us little, the daily charts still look negative and suggest that we could see further downside pressure in the days ahead. If so, once back below Thursday’s low, the 200 DMA (1.0825) 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 again be seen at 1.0900 and then at the 9 May 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. The preference is to trade from the short side and to sell into rallies, with a SL placed above 1.0935.

24 Hour: Prefer to sell rallies Medium Term: Prefer to sell rallies
                                          Resistance Support
1.0950 (61.8% of 1.1020/1.0838) 1.0838 Session low
1.0932 9 May high 1.0825/20 200 DMA /24 Apr low
1.0908 (38.2% of 1.1020/1.0838) 1.0795 (50% of 1.0570/1.1020)
1.0897 10 May high 1.0775 20 Apr high
1.0880 (23.6% of 1.1020/1.0838) 1.0740 (61.8% of 1.0570/1.1020)

Economic data highlights will include:

German CPI/HICP, GDP, US Retail Sales, CPI, Michigan Consumer Sentiment Index, Business Inventories, Baker Hughes Oil Rig Count

USDJPY: 113.82

US$Jpy retreated from its highs on Thursday, falling to 113.45, ahead of a bounce to finish the session at 113.85 as traders took some profit following the recent run higher by the dollar, with the pair trading largely in line with US stocks.

With the daily momentum indicators pointing sharply higher, further gains would seem possible in the medium term although the 4 hour charts are turning to point lower so some caution is warranted but buying dips remains the preferred strategy.

On the downside, back below the session low of 113.45, support would be seen at the100 WMA and the 100 DMA and below that the dollar could then head back to 112.80.

Back above 114.00 and the 114.36 trend high would find little meaningful resistance until we hit 115.20 and the previous trend high of 115.50, although possibly not today.

For the time being buying dips seems to be the plan, with a SL placed below 112.85.

24 Hour: Prefer to buy dips Medium Term: Mildly bullish – Prefer to buy dips.
                                         Resistance Support
115.50 10 Mar high 113.60 100 HMA
115.20 14 Mar high 113.45 Session low
114.90 Minor 113.25 100 WMA
114.50 Minor 113.00 100 DMA
114.36 10 May high 112.85 (23.6% of 108.12/114.36)

Economic data highlights will include:

Foreign Bond/Stocks Investment, Trade Balance, Eco Watchers Survey 

GBPUSD: 1.2886

The BOE UK left rates unchanged on Thursday, while the MPC also remained on hold (vote:7-1) but Sterling headed lower due to the mixed economic growth outlook, based on the supposition of a smooth Brexit, which looks doubtful. The Quarterly Inflation Report for UK growth was projected to be at 1.9% in 2017, revised down from prior 2.0%. 2018 and 2019 were revised up, to 1.7% and 1.8% respectively, from 1.6% and 1.7%.

The short term momentum indicators still look a bit heavy, and if we head back below the session low of 1.2848 then Cable could fall to 1.2830 (4 May low) and possibly to 1.2800/10.

On the topside, resistance will be seen at 1.2900 and at the session high of 1.2947. Beyond this looks doubtful today but if wrong we could see a run towards the double top (1.2988) beyond which could trigger a move to 1.3000 – last seen in September. Beyond that 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. A neutral stance seems wise today.

24 Hour: Neutral Medium Term:  Neutral
                                         Resistance           Support
1.3035/30 (38.2% of 1.5018/1.1821) Weekly cloud base 1.2860 Minor
1.3020 Weekly cloud base 1.2848 Session low
1.2985/88 55 WMA /8 May high/10 May high 1.2830 4 May low
1.2947 Session high 1.2805 26 Apr low
1.2925 100 HMA 1.2780 (23.6% of 1.2108/1.2987)

USDCHF: 1.0077

US$Chf traded sideways on Thursday, capped at 1.0100, while underpinned at 1.0050.

The short term  charts look pretty much neutral right now although the daily momentum indicators look slightly constructive, and if we get above 1.0100 and then 1.0107 (10 Apr high) 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 1.0145/55 and then again at parity, ahead of further minor Fibo levels at 0.9975 and 0.9950. 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 1.0055 Session low
1.0170 7 Mar high 1.0142 (23.6% of 0.9858/1.0099)
1.0140 Minor 1.0005 (38.2% of 0.9858/1.0099)
1.0107 10 Apr high 0.9980 (50% of 0.9858/1.0099)
1.0099 Session high 0.9950 100 DMA /(61.8% of 0.9858/1.0099)

Economic data highlights will include:


AUDUSD: 0.7376

After q quick run to the downside yesterday morning, following in the wake of the Kiwi after the RBNZ left rates unchanged, the Aud has had a choppy session and is finishing Thursday at the highs of the day, currently at 0.7380.

Technically, the short term momentum indicators still look mixed although the 4 hour charts do hint that we could see another squeeze to the topside, which, if correct would find offers above 0.7380 at 0.7395/00. Beyond 0.7400 would allow a move back towards 0.7415 and possibly to 0.7425.

The dailies do still point lower though, suggesting any short term strength should be sold into. Minor support now lies at 0.7350, but 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 towards 0.7400 to sell into, with a SL placed above 0.7425. Today could be another one of consolidation though and 0.7330/0.7400 may once again cover it. Selling into strength, with a SL placed above 0.7425 seems to be the plan.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
                                         Resistance                                         Support
0.7435 200 HMA 0.7350 Minor
0.7425 5 May high/8 May high 0.7330/28 (50% pivot of 0..6826/0.7835)/ 9 May low
0.7415 (35.2% of 0.7555/0.7328) 0.7298 (76.4% of 0.7160/0.7750)
0.7394 10 May high 0.7285 Rising trend support
0.7380 (23.6% of 0.7555/0.7328) 0.7260 Minor

Economic data highlights will include:

China Foreign Direct Investment

NZDUSD: 0.6842

The RBNZ got its wish yesterday and sent the Kiwi sharply lower without actually having to do anything, after leaving rates on hold. Currently holding on above the lows of 0.6817, both the 4 hour/daily momentum indicators do suggest that the downside could again be the direction to focus on.

Below the session low of 0.6817would find Fibo support at around 0.6805, and below that would then allow a move to 0.6780 and eventually lower, and at some stage I think we are going back to the 27 May 2015 low of 0.6675.

On the topside, resistance will be seen at 0.6860/70 and then again at 0.6900/05 although this looks doubtful today. Selling rallies is preferred.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
Resistance Support
0.6960 (61.8% of 0.7052/0.6817) 0.6840 5 May low
0.6950 10 May high 0.6817 Session low
0.6934 (50% pivot of 0.7052/0.6817) 0.6803 (50% pivot of 0.6125/0.7485)
0.6905 (38.2% of 0.7052/0.6817) 0.6780 (61.8% of 0.6347/0.7485)
0.6870 (23.6% of 0.7052/0.6817) 0.6750 Minor

Economic data highlights will include:

Business PMI