14 May: Forecast: FX: US$/Majors + trade ideas

By | May 14, 2018



EURUSD: 1.1939
The US$ remained under some downside pressure on Friday, with the Euro reaching a high of 1.1967 after US import prices missed on the downside, before settling at 1.1940, near the 200 HMA. The EU/German Q1 GDP, May ZEW and the US Apr Retail Sales are early week data risks
1 hour/4 hour indicators: Mixed. –Turning higher Daily Indicators: Possible basing formation Weekly Indicators:  Turning lower.
Preferred Strategy:  A more cautious tone is needed at the start of the week, with both the 4 hour/daily momentum indicators hinting that we may be in for a further topside squeeze. If so, above Friday’s high, the Euro would run into offers at 1.1975 ahead of a potential test of 1.2000 and the 200 DMA at 1.2015. Above this, the next target would be at 1.2070 (38.2% of 1.2475/1.1822).

The weeklies still point lower though and if we get back below the initial support at 1.1890/1900 then we could see a return to 1.1840 and to 1.1815/25, where the 55 WMA/December 12 low has so far propped the Euro up. A break would find minor bids at 1.1800, below which allows for a run towards 1.1785, beneath which there is little support to be seen ahead of 1.1700/10.

An empty calendar for Monday may mean a choppy but directionless session.

Sell EurUsd @ 1.2000. SL @ 1.2050, TP @ 1.1840

Buy EurUsd @ 1.1880. SL @ 1.1810, TP @ 1.2000

Resistance Support
1.2030 Minor 1.1930 200 HMA
1.2015 200 DMA 1.1890 Friday low /100 HMA
1.2000 Minor 1.1837/42 55 WMA/11 May low
1.1975 (23.6% of 1.2475/1.1822) 1.1822/16 9 May low/22 Dec low
1.1967 Friday high 1.1787 (76.4% of 1.1553/1.2555)

Economic data highlights will include:

M: Fed’s Mester Speech

T:  EU/German Preliminary Q1 GDP, EU Industrial Production – Mar, German/EU ZEW Economic Sentiment Survey – May, US Retail Sales – Apr, New York State Empire Mfg Index – May, Business Inventories – Mar, NAHB Housing Market Index – may, API Weekly Crude Oil Stock Inventory

W:  Non-Monetary Policy  ECB Meeting, German CPI/HICP, EU CPI, US Housing Starts, Building Permits, Industrial Production, Capacity Utilisation -Apr

T: EU Trade Balance – Mar, Construction Output – Mar, Philadelphia Fed Mfg Survey – May

F: German PPI, Wage Price Index – Apr, EU Current Account – Mar,

USDJPY: 109.36
US$Jpy was generally choppy above 109.00 on Friday but in general, it remains soggy after last week’s soft US CPI, below the 110.00 double-top. With  no major economic news until US Retail Sales  on Tuesday, some range trading near current levels seems likely to persist until then
1 hour/4 hour indicators: Mixed. – Turning lower? Daily Indicators: Turning lower. Weekly Indicators:  Turning higher
Preferred Strategy:  The momentum indicators are mixed heading into the new week so a cautious stance is required.

The daily charts are now attempting to point a little lower after having failed to take out 110.00 where the double top exists. The initial support will arrive at Friday’s low of 109.15 ahead of the 9 May low of 109.00. Below here, look for a return to 108.75/80 and possibly to 108.55/65 although this looks unlikely today

Minor resistance will arrive at 109.80 ahead of the strong level seen at 110.00.  A sustained break of 110.00 would then allow for a move to 110.20/25, which should also be strong, ahead of 110.50 and 110.85 (76.4% of 114.73/104.60).

Sidelined; Possible range trade on Monday 108.80/109.60?

Resistance Support
110.48 2 Feb High 109.15 Friday low
110.15/25 200 DMA /(61.8% of 114.73/104.60) 108.99 9 May low
110.02/00 2 May high /11 May high 108.72/75/82 7 May low /8 May low
109.80 Mino 108.63/54 4 May low //24 Apr low/100 DMA
109.56 Friday high 108.15 Neckline

Economic data highlights will include:                                                                             

M: Preliminary April Machine Tool Orders


W:  Japan Preliminary Q1 GDP


F: CPI – Apr

GBPUSD: 1.3538
Cable had a choppy session to end the week but ultimately shows little change as it consolidates in the 1.35/36 range, still sitting close to the 200 DMA.
1 hour/4 hour indicators:  Neutral Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look mixed on Monday and a neutral stance is required. If Cable does manage a squeeze higher, near term resistance will again be seen at 1.3580/90 ahead of 1.3600/10. Beyond Thursday’s brief pre-BOE high of 1.3617, sellers would arrive at 1.3640/50 and the 2 May high 1.3665 although that seems some way off right now

The longer term charts still look heavy though, and a retest of minor support at 1.3515, Friday’s  low at 1.3500, and then the 8 May/trend low of 1.3485 would not surprise in the days ahead. A break of this would open the way to the January low at 1.3457 and the major Fibo level at 1.3400 (38.2% of 1.1821/1.4376)

Neutral. Possible sell rally scenario although the daily charts are becoming oversold, while the weeklies are pointing lower

Resistance Support
1.3665 2 May high 1.3501 Friday low
1.3629 3 May high 1.3485 Minor
1.3617 11 May high 1.3457/60 11 Jan low /11 May low
1.3595 Friday high 1.3425 Minor
1.3550 200 DMA 1.3398 (38.2% of 1.1822/1.4376)

Economic data highlights will include:                                                                                                                 



W:  UK Unemployment – Apr, Inflation Report Hearing



USDCHF: 1.0004
US$Chf, was headed lower on Friday, to reach 0.9976 before a bounce that has seen the pair close the week at parity, unchanged from this time last week.
1 hour/4 hour indicators: Mixed. Daily Indicators: Possible topping formation. Weekly Indicators:   Up
Preferred Strategy:  The short term momentum indicators do look a little heavy and with the dailies now also turning a little lower it maybe that the recent uptrend has now run its course, although the weekly charts still point higher so looking to buy dips remains the medium/longer term strategy.

If the dollar does head lower today, support will again be seen at 0.9975/80, below which would head to minor levels at 0.9965/35/15 ahead of the 1 May low of 0.9890. This looks unlikely right now but if wrong, on a break of 0.9890, further bids should arrive at 0.9870 and at 0.9845/50.

On the topside, decent resistance will be seen at the trend high of 1.0055, which looks unlikely to be taken out today, but above which would open the way to 1.0065/70, which is a major Fibo level, and to 1.0100. Further out we are potentially looking at a run up to 1.0170 and even to the December 2016 high of 1.0343 albeit probably not for a while to come.

Buy US$Chf @ 0.9940. SL @ 0.9885, TP @ 1.0100

Resistance Support
1.0170 March 2017 high 1.0000 200 HMA
1.0107  Apt 2017 high 0.9976 Friday low
1.0099 May 2017 high 0.9965 4 May low
1.0067 (76.4% of 1.0343/0.9187) 0.9935 2 May low
1.0055/56 7 May high /9 May high /11 May high 0.9890 1 May  low

AUDUSD: 0.7541
The Aud remained underpinned on Friday, reaching a high of 0.7566 before settling at 0.7545 and looking a little heavy after the EM currencies got hit hard against the US$. The Aud$ acts as a bit of a proxy for EM and came under some minor pressure heading into the week’s close. The Australian Retail Sales, China CPI (both Tuesday) and Thursday’s Unemployment data will be the focus this week.
1 hour/4 hour indicators: Mixed. –Turning higher? Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators are mixed today while the daily charts now look as though they may be attempting a basing formation. In the absence of any data today though it may be a day of choppy consolidation, allowing the short term momentum indicators to unwind a little.

If we do see a near term squeeze higher, as the 4 hourly charts hint as being possible, then minor resistance will be seen again at 0.7565/70 and then at 0.7.7580/90 ahead of 0.7600/05. This seems unlikely to be visited today but if wrong look for further gains towards 0.7620.

The weekly charts remain heavy, and would seem to suggest further losses to come in the days ahead. If so, the initial support will arrive at 0.7500 ahead of 0.7485 and 0.7450. Below minor support at 0.7435/40 would then head towards the 9 May low of 0.7411, the 11 month trend low. Below 0.7400,  there really is not too much to hold it up ahead of Fibo support at 0.7385, the 1 June 2017 low at 0.7371 and the May 2017 low of 0.7328.

For today, look for a range trade; 0.7490/0.7565?

Longer term; Sell AudUsd @ 0.7600. SL @ 0.7640, TP @ 0.7450

Resistance Support
0.7620 24 Apr high 0.7522 Friday low
0.7604 (38.2% of 0.7915/0.7411) 0.7500 200 HMA
0.7582/88 (23.6% of 0.8135/0.7411) /26 April high 0.7485 100 HMA
0.7566 Friday high 0.7450 11 May low
0.7550 Minor 0.7411 9 May low

Economic data highlights will include:


T:  RBAs Debelle Speech, RBA Minutes, China Retail Sales, Industrial Production, Fixed Asset Investment – Mar

W: Q1 Wage Price Index, China House Price Index – Apr

T: Consumer Inflation Expectation – May, Unemployment – Apr


NZDUSD: 0.6962
 The Kiwi traded a sideways range on Friday (0.6953/86), well protected above the trend low of 0.6902 seen on Thursday and allowing the charts some reprieve after the recent sharp selloff.
1 hour/4 hour indicators: Mixed Daily Indicators:   Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   The Kiwi still looks vulnerable although a range trade may be in order on Monday, with little to come on the calendar to disturb the balance.

Support will arrive at 0.6935 (76.4% of 0.6780/0.7438) and then again at 0.6915, long term rising trend support, ahead of the 0.6902 trend low.  A break of 0.6900 would trigger stops and open up a move to 0.6815 and then to 0.6780, with only minor support to be seen once 0.6900 is broken.

On the topside, sellers will be found again at 0.6980/85, at 0.6995/7000. This looks unlikely to be revisited today, although if wrong, look for a squeeze towards the 8 May high of 0.7030. Above here, unlikely, a bounce to 0.7040/50 would see sellers, beyond which allows for 0.7080 and then 0.7095/00, but probably not for quite a while now.

Resistance Support
0.7051/57 4 May high/ (23.6% of 0.7395/0.6953) 0.6953 Friday low
0.7030 8 May high 0.6935 (76.4% of 0.6780/0.7438)
0.7015/20 100 HMA/200 HMA 0.6915 Rising trend support
0.6997 9 May high 0.6902 11 May low
0.6986 Friday high 0.6870 Minor

Economic data highlights will include:                    


T:  Global Dairy Trade Index

W:  NZ Credit Card Spending