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

By | May 16, 2018


EURUSD: 1.1840
EurUsd has fallen back to the year’s low at 1.1819, coming under pressure after some soft EU data and then later in the day by a firm US Retail Sales reading. German/EU CPI and US Housing Data in focus today. ECBs Draghi/Coeure will both be speaking, as will the Fed’s Bostic/Bullard.
1 hour/4 hour indicators: Down Daily Indicators: Down -Becoming Oversold Weekly Indicators:  Turning lower.
Preferred Strategy:   The Euro has so far pulled up at the 9 May low and currently sits right on the 55 WMA.

While the dailies look a little oversold, the 4 hour charts are heavy and the weeklies are also pointing lower, so if we get back below  1.1815/25  we should find minor bids at 1.1800, below which allows for a run towards 1.1785, and  beneath that there is little support to be seen ahead of 1.1700/10.

On the topside, resistance will be seen at minor levels up to 1.1900, although right now I would be surprised to see the Euro back above 1.1875/80. If 1.1900 can be overcome, then look for a possible return to the session high of 1.1938 although this looks doubtful, but would be a decent level to sell into should we get there. Ahead of that,   surging US yields seem set to underpin the dollar so selling rallies near1.1800/1.1900 seems to be the plan today I think.

Sell EurUsd @ 1.1885. SL @ 1.1925, TP @ 1.1785

Resistance Support
1.1995 14 May high 1.1837 55 WMA
1.1975 (23.6% of 1.2475/1.1822) 1.1822/19/16 9 May low/Session low /22 Dec low
1.1938 Session high 1.1800 Minor
1.1900 Minor 1.1787 (76.4% of 1.1553/1.2555)
1.1875 Minor 1.1750 Minor

Economic data highlights will include:

Non-Monetary Policy  ECB Meeting, German CPI/HICP, EU CPI, US Housing Starts, Building Permits, Industrial Production, Capacity Utilisation –Apr, Speeches: ECBs Draghi/Coeure, Fed’s Bostic/Bullard

USDJPY: 110.31
US$Jpy is firmer today and has now taken out the 200 DMA at 110.15, which will now provide support. With US yields looking strong, the dollar should now head higher.
1 hour/4 hour indicators: Up – Becoming Overbought. Daily Indicators: Turning higher?. Weekly Indicators:  Turning higher
Preferred Strategy:  The momentum indicators are rather mixed heading into Wednesday, with the hourly charts now rather overbought, so a cautious stance is required, but buying dips, towards 109.80/110.00 today, remains the plan

If the dollar does head higher, then above 110.50, look for a run towards 110.85 (76.4% of 114.73/104.60). Beyond there, 111.00 would attract, above which there is not a lot of resistance ahead of 111.45/50.

The initial support will arrive at 110.15/00 ahead of 109.80 and the 100 WMA at 109.45 and then 109.20/15.

Sidelined – look to buy dips.

Resistance Support
111.47 18 Jan high 110.15 200 DMA
111.25 Minor 110.00 Pivot
111.00 Minor 109.80 Minor
110.85 Minor 109.47 100 WMA
110.48/45 2 Feb High/Session high 109.15/20 12 May low /14 May low

Economic data highlights will include:                                                                             

Japan Preliminary Q1 GDP, Capacity Utilisation, Industrial Production

GBPUSD: 1.3506
Cable made a new 2018 low today, reaching 1.3487 ahead of a bounce to finish the day at 1.3405.
1 hour/4 hour indicators:  Neutral Daily Indicators: Possible basing formation. Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators look mixed and a neutral stance is required on Wednesday. Although Cable is likely to remain under pressure against the dollar, it is currently outperforming on the crosses and this looks set to continue today.

The longer term Sterling charts still look heavy, and below today’s base at 1.3450 would allow a run to the and the major Fibo level at 1.3400

If Cable does manage a squeeze higher, near term resistance will again be seen at the 200 DMA at 1.3550 and to the session high of 1.3571 ahead of 1.3600/10.


Resistance Support
1.3665 2 May high 1.3500 Pivot
1.3629 3 May high 1.3485 Minor
1.3607 14 May high 1.3450 Session low
1.3571 Session high 1.3425 Minor
1.3550 200 DMA  /200 HMA /100 HMA 1.3398 (38.2% of 1.1822/1.4376)

USDCHF: 1.0009
US$Chf was choppy on Tuesday, trading a range of 0.9983/1.0041. Currently at 1.0010, further choppy sideways trade looks possible.
1 hour/4 hour indicators: Neutral. Daily Indicators: Possible topping formation. Weekly Indicators:   Up
Preferred Strategy:  The short term momentum indicators look neutral today, while the dailies now look a little toppish and it maybe that the recent uptrend has now run its course, possibly with some choppy trade ahead. The weekly charts still point higher though, so looking to buy dips remains the medium/longer term strategy.

If the dollar heads lower, support will again be seen at 0.9975/85, ahead of 0.9955/60 and minor levels at 0.9935/15 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, above Tuesday’s high, 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 @ 0.9980. SL @ 0.9940, TP @ 1.0100

Resistance Support
1.0107  Apt 2017 high 1.0000 Pivot
1.0099 May 2017 high 0.9983 Session low
1.0067 (76.4% of 1.0343/0.9187) 0.9957 14 May low
1.0055/56 7 May high /9 May high /11 May high 0.9935 2 May low
1.0041 Session high 0.9890 1 May  low

AUDUSD: 0.7473
The Aud took a hit in late Asia/early Europe and has been to a low of 0.7447 briefly, ahead of a bounce to current levels and now awaits the important Q1 Wage Price Index.(exp 0.6% qq, 2.6% yy) and the WBC Consumer Confidence .
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning Neutral Weekly Indicators:  Turning lower
Preferred Strategy:   While the hourlies are trying to correct higher the 4 hour charts suggest that we are in for another test of the 0.7445/50 level.  Below there would then head towards the 9 May low of 0.7411. This is an 11 month low and decent buying interest should arrive at 0.7400/10. 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.

If the Wage Price Index comes in above expectations, a squeeze could take us back to 0.7485/0.7505, which I think would be a decent area to re-sell the Aud. Above here opens up 0.7525, ahead of the Tuesday high of 0.7537 although this seems unlikely to be visited today.

Sell AudUsd @ 0.7500. SL @ 0.7540, TP @ 0.7400

Resistance Support
0.7566 12 May high/14 May high 0.7465 Minor
0.7537 Session high 0.7447 Session low
0.7525 Minor 0.7411 9 May low
0.7505 200 HMA 0.7400 Minor
0.7485 Minor 0.7371 2 June 2017 low

Economic data highlights will include:

Q1 Wage Price Index, WBC Consumer Confidence , China House Price Index – Apr

NZDUSD: 0.6861
 The Kiwi is lower again on Wednesday and having now broken the major rising trend support looks likely to see further losses in the days to come.
1 hour/4 hour indicators: Turning lower – Possible basing formation? Daily Indicators:   Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   The Kiwi has fallen to a low of 0.6853, and with a dead-cat bounce a move to 0.6815 and then to 0.6780 looks to be on the cards. Below that, there is very little support until 0.6670.

On the topside, sellers will be found today at 0.6880 (minor) and at 0.6900 ahead of the Monday high of 0.6924.

Sell NzdUsd @ 0.6900. SL @ 0.6945, TP @ 0.6800

Resistance Support
0.6970 200 HMA 0.6853 Session low
0.6950 Minor 0.6828 11 Dec low
0.6924 Session high 0.6816 1 Dec low
0.6900 Minor 0.6800 Minor
0.6880 Minor 0.6780 17 Nov low

Economic data highlights will include:                    

NZ Credit Card Spending