13 July: Forecast: FX: US$/Majors

By | July 13, 2017


EURUSD: 1.1415
24 Hour Outlook: Prefer to sell rallies Medium Term: Prefer to buy dips.
Preferred 24-hour Strategy:  In the short term the Euro appears to have made a false break on the topside, and with the short term momentum indicators now pointing down, a retest of the session lows and possibly lower now looks possible. In the longer term, the preference is still to buy dips although the daily charts are beginning to flatten out, so a cautious stance is wise. With little to drive markets today it could be a session of consolidation.

The Euro squeezed up to 1.1489, taking out the descending trend resistance to make a new 14 month high but then reversed following the cautious words of Janet Yellen, and closed just above the 1.1390 session low.

If the Euro remains heavy,  the initial support now lies nearby, at the 7 July/10 July/11 July lows of 1.1378/80, below which could then run towards 1.1345/50 and then to 1.1310/15.

On the topside, the initial resistance will be seen at 1.1440 (minor) and again at 1.1485/90 ahead of 1.1500. Above here, although unlikely today, only minor hurdles exist to stop the Euro from heading to the May 2016 high of 1.1616.

Resistance Support
1.1616 2 May 16 high 1.1405 (23.6% of 1.1117/1.1489)
1.1580 Minor 1.1390 Session low /200 HMA
1.1535 Minor 1.1379/81/78 7 July low /10 July low  /11 July low
1.1488 Session high 1.1345 (38.2% of 1.1117/1.1489)
1.1440 Minor 1.1310 5 July low

Economic data highlights will include:

USDJPY: 113.21
24 Hour Outlook: Prefer to sell rallies Medium Term: Mildly Bullish
Preferred 24-hour Strategy:  US$Jpy was unable to hang on above 114.00 and fell quite sharply, to a low of 112.92, following Janet Yellen’s cautious outlook, before closing at 113.20. The momentum indicators now generally seem to be suggesting that the dollar may have formed a medium term top, and selling rallies is preferred in the near term.

The short term momentum indicators again look heavy on Thursday, and we may see a near term move lower back towards the session lows at 112.90. A break of 112.70 could bring about a sharper fall towards the 100 DMA at around 112.25 ahead of a possible test of levels sub 112.00. As we said before, note that the monthly cloud top is rising sharply and currently lies at 111.30, but in the next 2 months will climb to 112.75 and then to 114.20 (Sept). We have not had a monthly close below the cloud top since Oct 2013.

On the topside, the daily charts look as though they are topping out, but if we do head higher, then look for resistance today at 113.45/50 and at 113.80 ahead of 114.00. I don’t think we head up here today but if wrong, we could head back to the 114.49 trend high and further out, if we can take out the resistance seen at the 11 July high of 114.49, there is little to stand in the way of an attack on 115.00 and eventually higher.

Resistance Support
114.49 11 July high 113. 00 (23.6% of 108.12/114.49)
114.35 Minor 112.92 Session low
114.15 Minor 112.73 4 July low
113.80 100 HMA 112.30 (38.2% of 108.80/114.49)
113.45 Minor 112.05 (38.2% of 108.12/114.49)

Economic data highlights will include:

Weekly Foreign Bond/Stocks Investment

GBPUSD: 1.2892
Preferred 24-hour Strategy:  Cable fell to 1.2811 on Wednesday but then bounced following the better than expected UK jobs data and reached the session highs (1.2906) after Yellen’s cautious outlook. The price action remains choppy so a neutral stance is required.

The short term momentum indicators are now neutral, as are the dailies, so there are better things to watch but on the downside, back below minor support near 1.2850 could retest the stronger 1.2810 area. A break of 1.2790 could have us quickly back at 1.2750 although this seems unlikely today.

On the topside, sellers will be seen at 1.2900/05 ahead of the 1.2926 11 July high, at 1.2935 and then again at 1.2985/1.3000 ahead of the trend high of 1.3047.

For the time being a neutral stance is required, and the triangle formation seems set to dominate the price action for the time being.

Resistance Support
1.3000 Pivot 1.2850 Minor
1.2983 6 July high 1.2811/10 Session low/(50% of 1.2588/1.3029)
1.2936 200 HMA 1.2793 28 June low
1.2926 11 July high 1.2770 Minor
1.2906 Session high 1.2755 (61.8% of 1.2588/1.3029)

Economic data highlights will include:

BOE Credit Conditions Survey

USDCHF: 0.9650
24 Hour Outlook: Neutral Medium Term: Neutral
Preferred 24-hour Strategy:  US$Chf has had another reasonably tight range above 0.9600 (0.9601/60) and leaves a neutral stance in place.

The short term momentum indicators are flat, and good support still lies at 0.9590/ 0.9600, although if this is taken out there is not too much to hold it up until 0.9550, where the 200 WMA has done a good job of propping the dollar up over the last couple of weeks. Below there would be a longer term concern for the dollar and could see a run back to previous, 2016 lows at 0.9520/30, to 0.9500, and potentially a fair bit lower.

On the topside, above 0.9660, decent resistance still lies in the band between 0.9670/85, above which could take us on to 0.9700 and then to 0.9745 although I don’t see it up here today.  More choppy trade looks likely.

Resistance Support
0.9745 Descending trend resistance 0.9601 Session low
0.9725 Minor 0.9591 7 July low
0.9695 11 July high 0.9555/52 3 July low/29 June low /200 WMA
0.9680 (23.6% of 1.0099/0.9555) 0.9535 18 Aug  2016 low
0.9661 Session high 0.9521 23 June 2016 low

AUDUSD: 0.7681
24 Hour Outlook: Mildly Bullish Medium Term: Neutral
Preferred 24-hour Strategy:  The Aud has managed to take advantage of the mixed US$ following Janet Yellen, with yield currencies mildly back in favour. Further near term gains look possible although the short term charts are in danger of becoming overbought. Buying dips does seem to be the plan though.

The 1/4 hour indicators still look mildly positive, and on the topside resistance will be seen at the 0.7680 high, beyond which could run towards 0.7700 and even back to 0.7710 (30 June trend high). If the descending trend resistance, now  at around 0.7720, gets taken out, we need to reappraise the situation as we would then be in for a run towards the April 2016 high of 0.7835, although it is too early to consider this yet.

The dailies have lost any negative momentum, but on the downside, support will be seen at 0.7650 and again at around 0.7615/20 ahead of Tuesday’s low of 0.7602 and Monday’s low of 0.7585. Beyond that, although currently over the horizon, could see a return to 0.7565/70. If this area is ever taken out we may then be in for a move towards 0.7540 and possibly to 0.7520.

As with yesterday, either buying for the day trade, or selling into any strength (for structural trade) with a SL, today placed above 0.7715 could be the plan.

Resistance Support
0.7749 21 Mar high 0.7655 Minor
0.7720 Descending trend resistance 0.7635 Minor
0.7711 30 June high 0.7620/15 200 HMA /Session low
0.7695 Minor 0.7602 11 July low
0.7680 Session high 0.7585 10 July low

Economic data highlights will include:                                                                                     

China Trade Balance (June)

NZDUSD: 0.7261
24 Hour Outlook: Prefer to sell rallies Medium Term: Neutral –Turning lower?
Preferred 24-hour Strategy:  Neutral.

The short term momentum indicators are mixed, although the dailies still point lower, and while a short term neutral stance is required, I still suspect that selling rallies is possibly the main game.

The Kiwi reached a spike high of 0.7280, and selling into this level, with a SL placed above 0.7300 could be a plan for Thursday. Back above 0.7300 though,  could then revisit the trend high of 0.7345 although this seems a long way off right now.

On the downside, the initial support lies at 0.7235/40 (minor) ahead of the session low of 0.7201. Below 0.7200, 0.7170/90 will provide minor support but below that could accelerate towards 0.7145 and eventually to 0.7080.

                                         Resistance             Support
0.7344/45 3 July high/29 June high 0.7235 Minor
0.7325 Minor 0.7215 Minor
0.7309 7 July high 0.7201 11 July low
0.7280/82 Session high/10 July high 0.7193 22 June low
0.7265 Minor 0.7170 12 June low

Economic data highlights will include:

Business PMI (July), Food Price Index (June)