12Dec: Forecast: FX: US$/Majors + trade ideas

By | December 12, 2017


EURUSD: 1.1766
€/Usd has traded a little higher in a tight session for much of Monday (1.1763/1.1811) before giving up the gains late in the day, while waiting on the upcoming FOMC/ ECB meetings, with much of the action coming through the crosses, where EurJpy and EurGbp were prominent drivers. As before,  the 4 hour/daily momentum indicators are mixed and a neutral stance is required as we head towards the Fed and ECB Meetings, due Wed/Thur.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  The short term momentum indicators look mixed and I remain fairly neutral although the daily charts do appear to be turning a little lower and may be hinting of further dollar strength ahead. The ZEW is the main focus today and the 4 hour charts look mildly constructive, so look for a range of 1.1740/1.1820 to cover it today.
Resistance Support
1.1900 Minor 1.1763 Session low
1.1877 4 Dec high 1.1755 Daily Kijun
1.1847 6 Dec high 1.1730 8 Dec low
1.1811 Session high 1.1707 (61.8% of 1.1553/1.1943)/ Rising trend support
1.1800 100 DMA 1.1650 (76.4% of 1.1553/1.1943)

Economic data highlights will include:

German/EU ZEW Economic Sentiment Survey – Dec, US NFIB Business Optimism Index, PPI – Nov, API Weekly Crude Oil Stock Inventory

USDJPY: 113.53
US$Jpy finished the day pretty much unchanged after a range of 113.23/68, leaving the outlook unchanged.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning higher Weekly Indicators:  Neutral
Preferred Strategy:  With the momentum indicators looking mixed, another rangebound session would not surprise while we wait on Wednesday’s Fed decision. On the topside, a break of Monday’s high would then allow a run towards 113.80, beyond which 114.00/05 will see sellers ahead of a possible towards 114.30 and even 114.75. On the downside, support will be seen at 113.20 and again at 113.00 below which could see a run back towards 113.50/60 although probably not today.

As before, look to buy dips towards 113.00/10 with a SL placed sub 112.80.

Buy US$Jpy @ 113.05. SL @ 112.85, TP @ 114.20

Resistance Support
114.73 6 July high 113.37 Daily cloud top
114.33 7 July high 113.24 Session low
114.06 9 Nov high 113.07 8 Dec low
113.80 (76.4% of 114.73/110.83) 112.95 (23.6% of 110.83/113.58)
113.68 Session high 112.55 (38.2% of 110.83/113.58)

Economic data highlights will include:

Machine Tool Orders, Tertiary Industry Index – Nov

GBPUSD: 1.3336
Having reached a brief high of 1.3430 in early Europe, Sterling has moved steadily lower through the rest of the session, to a low of 1.3330, as those holding long positions lighten up ahead of the EU Summit, BOE MPC meeting and a slew of UK econ data, beginning today with the CPI, PPI, RPI.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning lower                                                                     Cable fell to a 1-wk low at 1.3358  amid Brexit uncertainty, ending NY 1.3375 Weekly Indicators:  Turning higher?
Preferred Strategy:  It looks set to remain choppy in the medium for Sterling, with Brexit headlines likely to guide the direction although today will see the important UK CPI (exp 0.2% mm, 3.1% yy)  ,ahead of the FOMC Meeting (Wed) and the BOE Meeting (Thur).

I would remain neutral for the time being and possibly look to play a range of 1.3250/1.3430 although the momentum indicators suggest that the bias will remain to the downside.

Resistance Support
1.3520 8 Dec high 1.3330 Session low
1.3430 Session high 1.3319 7 Dec low
1.3417 Weekly cloud top 1.3295 (50% of 1.3038/1.3549)
1.3400 Minor 1.3280 Minor
1.3375 Minor 1.3250 Minor

Economic data highlights will include:                                                                                                              


USDCHF: 0.9919
US$Chf has traded a tight range of 0.9896/9935 on Monday, and something similar may be in store on Tuesday as traders stand aside ahead of the FOMC/SNB/ECB Meetings due Wed/Thur.
1 hour/4 hour indicators: Turning lower Daily Indicators: Neutral Weekly Indicators:  Neutral
Preferred Strategy:  With the short term charts looking heavy, a test of 0.9900/0.9875 would not surprise although the daily momentum indicators still look mildly constructive, and buying dips is still preferred as I suspect that we could eventually see a run back to 1.0000 and possibly to 1.0040.

Buy US$Chf @ 0.9885. SL @ 0.9830, TP @ 0.9980.

Resistance Support
1.0000 Psychological 0.9896 Session low
0.9971 8 Dec high 0.9985 (38.2% of 0.9742/0.9977)
0.9965 (76.4% of 0.1137/0.9816) 0.9854 6 Dec low / (50% of 0.9742/0.9977)
0.9950 Minor 0.9835 100 WMA /5 Dec low
0.9935 Session high 0.9800 Minor

AUDUSD: 0.7528
 AudUsd is trading higher on Tuesday, dragged up by the Kiwi, and is now awaiting the NAB Business Conditions/Confidence and the China Foreign Direct Investment for a directional bias.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   Although the short term momentum indicators are still mixed, trading from the short side continues to be the plan ahead of the FOMC Meeting (Wed) although I suspect there may be better levels to do so, given the positive look of the 4 hour charts. I suspect that further upside for the Aud will be limited and selling into rallies is still preferred but we could easily see a run back to the 100 WMA (0.7550) which could act as a magnate over the next 24 hours Beyond there would find sellers at 0.7565/70. On the downside, there will be plenty of work to do at 0.7500, below which, 0.7470/80 area will be strong, so taking some profit on shorts and looking to resell into a rally may be a more medium term plan.

Sell AudUsd @ 0.7565. SL @ 0.7585, TP @ 0.7475.

Resistance Support
0.7600 Minor           0.7502 8 Dec low/Session low
0.7585 Minor 0.7480 Rising trend support
0.7565 200 HMA 0.7470 Weekly cloud top/Weekly cloud base
0.7550 100 WMA 0.7450 Minor
0.7545 Session high 0.7415 Minor

Economic data highlights will include:

New Home Sales – Oct, NAB Business Conditions/Confidence – Nov, China Foreign Direct Investment – Nov

NZDUSD: 0.6911
The Kiwi has soared on the announcement of the new RBNZ governor, Adrian Orr, who will take over in March, running up from 0.6822 to 0.6930 in what looks pretty much like an overreaction to me, probably driven by shorts needing to cover in thin conditions.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:  The rally in the Kiwi has taken us back to what appears to be a reverse head/shoulder neckline, which if it turns out will have an objective at around 0.7100. Right now I would be square but a break of 0.6945 would suggest further topside momentum so buying a break may be the plan.

Buy NzdUsd @ 0.6950 SL Entry.  SL @ 0.6890, TP @ 0.7080

Resistance Support
0.7030 (38.2% of 0.7434/0.6783) 0.6900 Minor
0.7005 24 Oct high 0.6875 Minor
0.6980 9 Nov high/Descending trend resistance 0.6850 Minor
0.6945 28 Nov high 0.6822 Session low
0.6930 Session high 0.6816 1 Dec low