16 Apr: Forecast: FX: US$/Majors + trade ideas

By | April 16, 2018

 

EURUSD: 1.2327
EurUsd had a narrow range in a choppy session on Friday, leaving the momentum indicators mixed today and the outlook pretty much unchanged, requiring a cautious stance at the start of the week as we sit right on the top of the daily cloud. The March US Retail Sales will be the key driver today (exp -0.1%mm, Retail Control group +0.1%, Ex-Auto +0.2%).
1 hour/4 hour indicators: Mixed. Daily Indicators: Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The short term momentum indicators are flat/mixed today and a cautious stance is required.

On the topside, minor resistance will be seen at 1.2345/50 and again at 1.2375 ahead of 1.2395/1.2400. Above 1.2400 we could then head towards 1.2420 and even1.2470, but the latter seem unlikely today unless the US CPI figure misses badly.

On the downside, support will arrive at 1.2300/05 and then at 1.2260/50, where the rising trend support should remain strong support.  Having tried and failed to break below this trend support trend support last week in trading down to 1.2215, this area will also remain strong support. This looks likely to hold for a while although a break could then head towards Fibo/100 DMA support at 1.2170/75. Below there would target 1.2085 and possibly 1.2025 although this remains over the horizon for now.

As before, I remain fairly neutral while this choppy trade persists, but given the speculative long Euro positioning, I still mildly prefer the downside in the medium term and would look to sell rallies towards the top end of the current range. Right now it seems that we are likely to just chop around within the existing range- Something like 1.21/1.25 – but going nowhere fast. US Retail Sales  in focus today

Resistance Support
1.2421 28 Mar high 1.2299/1.2306 12 Apr low/Friday low (Daily Tenkan)
1.2415 (76.4% of 1.2475/1.2215) 1.2250 9 Apr low/Rising trend support
1.2395 10 Apr high 1.2215 6 Apr low
1.2375/79 (61.8% of 1.2475/1.2215) /12 Apr high 1.2200 Minor
1.2344 Friday high 1.2170 (38.2% of 1.1553/1.2555) /100 DMA

Economic data highlights will include:

M: US Retail Sales, Business Inventories, New York State Empire Mfg Index, NAHB Housing Market Index

T:  EU CPI, German/EU ZEW Economic Sentiment Survey, US Building Permits, Housing Starts, Capacity Utilisation, Industrial Production, API weekly Crude Oil Stock Inventory

W:  German Wholesale Price Index, EIA weekly crude oil stock change

T: EcoFin Meeting, EU Current Account, Philadelphia Fed Mfg Survey, US Jobless Claims

F: IMF Meeting, German PPI, EU Provisional Consumer Confidence – April,



USDJPY: 107.36
US$Jpy finished Friday unchanged, after a squeeze up to 107.75 failed and saw a return to 107.30, roughly where it had started, as early risk-on sentiment turned around and saw traders cut positions, in sympathy with the lower stock markets, ahead of the weekend.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:  The daily momentum indicators retain a constructive bias and the weeklies are also now turning higher so sentiment does look to be improving for US$Jpy despite the increasing M.E tensions that could see a return of Yen demand at any time. The short term charts look a bit heavy though so a fairly neutral stance is required but, technically, buying dips still seems to be the plan.

On the topside, back above minor resistance at 107.50 would find offers at 107.75 and then again at the mid-February highs at 107.90.  Above here, 108.10 would then be a target above which could see a move to 108.45/50.

On the downside, buyer will be seen at 107.20 (Friday low/Daily cloud base) and at 107.00 ahead of good support at 106.55/65, below which could see a reverse towards 106.20, 106.00, and possibly towards the 3 April low of 105.68 although this seems unlikely right now.

As before, if stocks turn sharply lower again, probably taking US$Jpy along for the ride despite the currently positive medium term indicators, a move back below the 200 MMA (105.60) would open the way to 105.30, a break of which would allow a return to 104.60. Below that, there is little to support the dollar until 103.50 – This currently looks well beyond the horizon, and overall, while the dailies remain positive, I prefer to be trading from the long side and looking to buy dips.

Buy US$Jpy @ 106.80. SL @ 106.45, TP @ 107.80

Resistance Support
108.45 (38.2% of 114.73/104.60) 107.20 Friday low /Daily cloud base
108.10 (38.2% of 113.75/104.60) 107.00 200 HMA
107.90 21 Feb high 106.61/64 9/10 Apr lows /11 Apr low
107.75 Friday high 106.55 (38.2% of 104.60/107.75)
107.50 Minor 106.20 (50% of 104.60/107.75)

Economic data highlights will include:

M:

T:  Industrial Production, Capacity Utilisation

W:  Merchandise Trade Balance

T:

F: National Japan CPI



GBPUSD: 1.4237
Cable traded higher again on Friday in reaching 1.4295, but then stalled and turned lower to finish the week right on the 200 WMA which could act as a bit of a magnate early in the coming week.
1 hour/4 hour indicators: Mixed Daily Indicators: Turning higher Weekly Indicators:  Turning Neutral
Preferred Strategy:   Although Cable failed at the highs on Friday, the dailies do look positive and if q.4300 can be taken out then we are left looking at a test of   the Jan (2018) high 1.4346, above which there is then little to stop a run at the post-Brexit high 1.5022

In the meantime, the short term charts now look a little heavy and hint at a possible return to minor levels at 1.4220 and at 1.4200 ahead of more substantial support at 1.4160.

Overall, while I mildly prefer the topside in the days ahead – given the outlook on the daily charts – I suspect some choppy trade today may see a dip to the downside, and would look to buy Sterling sub 1.4200 for an eventual test of 1.4300, and above.

An interesting point from Bank of Tokyo-Mitsubishi UFJ who say that Cable has risen every April for the past 13 years by an average 2.3%. It is currently up 1.7%.

Resistance Support
1,4345 25 Jan high 1.4220 Friday low
1.4320 Minor 1.4195 100 HMA
1.4295 Friday high 1.4160 (23.6% of 1.3710/1.4295)
1.4270 Minor 1.4144 12 Apr low
1.4245 200 WMA 1.4125 200 HMA

Economic data highlights will include:

M:

T:  UK Unemployment

W:  UK CPI, PPI, RPI

T:  UK Retail Sales

F:



USDCHF: 0.9618
US$Chf had a tight range (0.9600/38) on Friday, leaving the outlook unchanged – Neutral but prefer to buy dips
1 hour/4 hour indicators: Neutral Daily Indicators: Turning Neutral Weekly Indicators:   Neutral
Preferred Strategy:  The short term momentum indicators look fairly neutral at the start of the week, requiring a cautious outlook, although while we trade above the rising trend support, I still prefer to buy the dips.

If the dollar falls back below 0.9600, the initial support will arrive at 0.9585 ahead of the rising trendline at 0.9550, which should remain intact today – unless the US Retail Sales fail badly and produce a decent dollar sell-off.

The longer term momentum indicators still look pretty much neutral, but if we do see a turn higher, then above 0.9635/40 we will then run into the strong resistance at the 200 DMA (0.96550 and then at the 200 WMA (0.9680) and I doubt that we see this tested today, but think it will happen eventually.

Resistance Support
0.9700 Minor 0.9600 Friday low
0.9685 200 WMA/Weekly cloud base 0.9585 100 DMA
0.9666 18 Jan high 0.9555/50 11 Apr low/4 Apr low / Rising trend support
0.9652/48 200 DMA /6 Apr high 0.9534 (23.6% of 0.9187/0.9596)/10 Apr low
0.9638 Friday high 0.9526 2 Apr low


AUDUSD: 0.7760
The Aud ran up to 0.7809 on Friday, but then turned  lower  as bear pressure set in once NY opened, as the US$ picked up a bid tone in early trade before the stock market slide bought about some AudJpy selling, causing AudUsd to end the week at  0.7760- towards the lows of the day.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning higher Weekly Indicators:  Neutral
Preferred Strategy:   The Aud looks a little mixed at the start of the week, with the dailies looking quite positive, while the short term momentum indicators look heavy, and the long upper wick on Fridays candle hint that a top might be in place.

If the positive look from the dailies prevails, then we could be in for another run to 0.7785 and back to 0.7800/10, above which could see a run towards 0.7850 and then to 0.7900.

If we head back below 0.7750/45 today, further support would arrive at 0.7735 and 0.7720 below which could revisit 0.7705/95 (10 April low – 0.7693) although this currently seems unlikely. Further out, the Aud has found a medium term base in the 0.7645/50 range (9 April low – 0.7651), and this needs to be taken out in order to allow further downside progress towards the next major level, at 100 WMA (0.7625). Below this would then move towards the major rising trend support from January 2016, at 0.7590, although that may take a while.

Sell AudUsd @ 0.7810. SL @ 0.7845, TP @ 0.7700

 

 

Resistance Support
0.7850 (76.4% of 0.7916/0.7642) 0.7752 100 HMA/Friday low
0.7825 Minor 0.7745 (38.2% of 0.7574/0.7808)
0.7810/08 200 DMA /(61.8% of 0.7916/0.7642) /Friday high 0.7737 12 Apr low
0.7785/79 200 MMA 0.7720 200 HMA
0.7778 100 DMA 0.7705 (61.8% of 0.7574/0.7808)

Economic data highlights will include:

M: New Motor Vehicle Sales – Jan

T:  RBA Minutes, China Retail Sales, Industrial Production, GDP-Q1, NBA Press Conference

W:  WBC Leading Index

T: NAB Business Confidence/Conditions – Q1, Australian Unemployment

F:



NZDUSD: 0.7352
 As with the Aud, the Kiwi had a choppy session on Friday although, unlike the Aud the Kiwi did briefly make a new trend high at 0.7395, but not being able to build on this it has since returned to currently sit at 0.7350.
1 hour/4 hour indicators: Turning lower Daily Indicators:  Turning higher Weekly Indicators:  Turning Neutral
Preferred Strategy:   The short term momentum indicators look a little heavy on Monday, suggesting that the Kiwi could be forming a near term topping formation, and the pair only missed making a bearish key day reversal by 2 pips.

If so, on the downside, the initial support will be seen at 0.7340/45, which has recently found good buying interest, ahead of the Fibo levels at 0.7338 and 0.7300 and 0.7275.

Now near the top end of the recent range I prefer to sell into strength, but with a stop placed on new short positions above 0.7440.

If the Kiwi does continue its run higher, the initial, minor resistance will arrive at around 0.7375 ahead of Fridays high of 0.7395. I don’t thing=k we head back up here today, but if wrong look for a run above 0.7400, where we could eventually see a run towards the 16 Feb high at 0.7436, albeit not today.

 

Sell NzdUsd @ 0.7415. SL @ 0.7445, TP @ 0.7315

Resistance Support
0.7450 Minor 0.7344/48 11 Apr low /12 Apr low/Friday low
0.7436 16 Feb high 0.7338 (23.6% of 0.7153/0.7395)
0.7410 19 Feb high 0.7320 Minor
0.7395 Friday high 0.7302 (38.2% of 0.7153/0.7395)
0.7370 Minor 0.7275 (50% of 0.7153/0.7395)

Economic data highlights will include:

M: Food Price Index – Mar

T:  Global Dairy Trade Index

W:  NZ CPI Q1

T:

F: