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

By | November 16, 2017


EURUSD: 1.1791
Preferred Strategy:  EurUsd had a choppy session, rising ahead of the US data and reaching a high of 1.1859, just as it was released, before turning lower, with most of day’s gains quickly given back as US yields recovered. At the end of the session, the dollar is back at 1.1790 and with the short term momentum indicators beginning to look a little heavy we might see a further decline today, where support will now be at 1.1780/85, beyond which could extend to 1.1740, which should be strong but below which would open the way back to 1.1700.

The daily momentum indicators do suggest that further gains are possible in the days ahead though, and above the session high would find good sellers at 1.1880/85, beyond which would allow a run towards 1.1900.

For the coming session I prefer to look to sell into strength, with a SL placed above 1.1880

Sell EurUsd @ 1.1830. SL @ 1.1885, TP @ 1.1740.

24 Hour: Mildly Bearish Medium Term: Neutral – Mildly Bullish? – Prefer to sell rallies
FX Charts Position: Short  – SL  above 1.1880
Resistance Support
1.1900 Minor 1.1784 Session low /(23.6% of 1.1553/1.1859)
1.1886 (61.8% of 1.2091/1.1553) 1.1760 Minor
1.1880 12 Oct high 1.1740/35 (38.2% of 1.1553/1.1859)/100 DMA
1.1857/59 20 Oct high/Session high 1.1700 Minor
1.1830 Minor 1.1660 14 Nov low

Economic data highlights will include:

German WPI, EU CPI, US Jobless Claims, Import/Export Index, Capacity Utilisation, Industrial Production, Philadelphia Fed Mfg Survey, NAHB Housing Market Index

USDJPY: 112.80
Preferred Strategy:  US$Jpy dived to 112.47 ahead of a strong bounce to 113.20 before closing the US session at just under 113.00.

With the short term momentum indicators looking mixed, a choppy session near to current levels would not surprise, and on the topside, minor resistance now lies at 113.50 ahead of 113.70 and the 14 Nov high of 113.90. Back above 114.00 and the 9 Nov high of 114.06 is unlikely today but if wrong, could return to 114.35/45 and beyond, towards the 114.73, 6th Nov high. Further out, we could eventually see a retest of the descending trend resistance, currently at around 114.90, and a break of 115.00 would then see little resistance until 115.20 and then 115.50.

The downside will find bids at 112.70 and again at 112.50. this may hold today, but if wrong, look for a move towards 112.30 and 112.00, ahead of strong support at 111.80 (100 DMA/200 DMA).

As before, I remain fairly neutral, although I still like the dollar in the medium term and prefer to buy dips, but today looks like being a choppy and rather directionless session. Use 112.70/113.30 as a guide.

24 Hour: Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
114.06 9 Nov high 112.95 (23.6% of 107.31/114.73)
113.90 14 Nov high 112.70 Minor
113.70 Minor 112.47 Session low
113.49 Session high 112.30 19 Oct low
113.20 Minor 112.00 Minor

Economic data highlights will include:

Foreign Bond/Stocks Investment

GBPUSD: 1.3170
Preferred Strategy: Sterling initially saw a move to 1.3213 after better than expected UK AWE, but then declined as the figure did not keep up with inflation, leaving the price largely unchanged on the day. EurGbp saw a quick spike above 0.9000 for the first time in a month although that did not last long and we are now back at 0.8960.

Overall, the momentum indicators are still in neutral so a cautious stance is required and it is wise to stand aside (although I remain long GbpAud). Further choppy trade near current levels would not really surprise although the UK Retail Sales figures are due today and may cause some volatility.

On the topside, resistance will again be seen at 1.1.3200, while back above 1.1.3213 would find good offers at around 1.3230, beyond which could see a run back to 1.3250 and eventually to 1.3300.

On the downside, support will be now seen at 1.3130 and at 1.3115 ahead of the rising trend support/14 Nov low at 1.3075 and then at 1.3000 although I don’t think we head down here today.

I remain neutral, possibly very cautiously bullish.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position: Flat (Long GbpAud)
Resistance Support
1.3275 2 Nov high 1.3130 Session low
1.3255 (76.4% of 1.3320/1.3042) 1.3115 100 DMA  /200 HMA
1.3228 10 Nov high 1.3074 14 Nov low /Rising trend support
1.3213 (61.8% of 1.3320/1.3042) /Session high 1.3060 13 Nov low
1.3200 Minor 1.3026 6 Oct low

Economic data highlights will include:                                                                                                        

Retail Sales

USDCHF: 0.9882
Preferred Strategy: US$Chf had another tough session in falling hard into the US data before bouncing to close in line with the previous session lows.

The daily momentum indicators are warning of further losses ahead, which if correct would find minor support at 0.9865/70, below which could see a run towards 0.9835 and 0.9800.

The short term momentum indicators though look a little more positive today following the bounce and if 0.9900 can be recovered then we could see a run towards 0.9940 and to the 14 Nov high of 0.9970. Eventually, I suspect we will see a move back towards parity although the momentum indicators don’t really suggest such a move at this stage.

Further out, given the positive look of the weeklies, if we can eventually take out 1.0015/25 we could then head on to take another look at 1.0035/40, above which there is little to hold the dollar up ahead of 1.0100, and beyond that to 1.1025 and 1.0170.

24 Hour: Mildly Bearish Medium Term: Prefer to buy dips
FX Charts Position: Long – SL @ 0.9840.
Resistance Support
1.0017 9 Nov high 0.9865 Minor
0.9986 13 Nov high 0.9845 Session low
0.9970 14 Nov high 0.9830/35 23 Oct low/100 WMA
0.9940 Minor 0.9800 (38.2% of 0.9420/1.0037)
0.9925 Minor 0.9775 Minor

AUDUSD: 0.7587
Preferred Strategy: The Aud had another tough day following yesterday’s soft WPI data but it did see a decent NY bounce, reaching 0.7620 before another decline to make new trend lows at 0.7572 and closing the session nearby.

Near term support arrives at 0.7570 (July low) below which would target Fibo support at around 0.7515. As I said before, I suspect the Aud$ is building a bear flag (see daily chart) and is likely to see a more sustained test the downside which will eventually take us towards 0.7400. Patience will be required but trading from the short side is still preferred.

On the topside, resistance will be seen at 0.7600, at 0.7620 and at 0.7650. I doubt we go close but if wrong, above here could then revisit the 13 Nov high of 0.7665, above which would then allow room to move towards 0.7675/80 and possibly 0.7695/0.7700.

The local jobs data is key today, and if weak, will see the Aud make new lows against many currencies. (Expect 17.5K, PR 65.2%, headline rate5.5%).

Sell AudUsd @ 0.7600. SL @ 0.7635, TP @ 0.7515

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Neutral –Mildly Bearish
FX Charts Position:    Short
Resistance Support
0.7693 10 Nov high/9 Nov high/Descending trend resistance 0.7571 Session low/7 July low
0.7665 13 Nov high /200 HMA 0.7550 Minor
0.7649 14 Nov high 0.7520 (76.4% of 0.7328/0.8124)
0.7625 Minor 0.7500 Minor
0.7600 Minor 0.7475 Minor

Economic data highlights will include:

Unemployment, Consumer Inflation Expectation

NZDUSD: 0.6877
Preferred Strategy: The Kiwi has had a choppy session but has easily held the previous day’s low by spiking up to 0.6918 around the US data, before falling hard to finish the day at 0.6875.

The momentum indicators are now mixed and we may be in for another choppy day, with the Australian jobs data likely to drag the Kiwi around through the cross.

On the downside, the initial support lies at 0.6860 ahead of  0.6845 and 0.6830, below which would find strong support at 0.6817 where we have a major double bottom with the May low. Below that though would then find that there is little support ahead of 0.6670 although this remains a long way off.

On the topside, minor resistance will be seen at 0.6900 and again at 0.6920 and 0.6935. The 4 hour charts may be attempting to point a little higher so a small upside squeeze would not really surprise although I still prefer to sell into strength..

Overall, with the longer term (weekly) charts looking heavy, I suspect the Kiwi is currently biding its time ahead of a more sustained test of the recent lows, but patience will be required.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
0.6975/79 Descending trend resistance /9 Nov high 0.6861 Session low
0.6957 10 Nov high 0.6844 14 Nov low
0.6935 13 Nov high 0.6832/30 30 Oct low /31 Oct low
0.6918 Session high 0.6817 11 May low/27 Oct low
0.6900 Minor 0.6800 Minor