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

By | April 17, 2018


EURUSD: 1.2383
EurUsd had a sharp squeeze higher in Europe on Monday, reaching 1.2395, since when it has chopped around below those levels. Tuesday will look to the German/EU ZEW Economic Sentiment Survey, US Building Permits, Housing Starts, Capacity Utilisation and Industrial Production for guidance, along with assorted Fed speakers.
1 hour/4 hour indicators: Mixed. Daily Indicators: Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The short term momentum indicators are mixed but possibly leaning higher today, and on the topside, minor resistance will again be seen at 1.2395/1.2400. Above 1.2400 we could then head towards 1.2415/20 and even towards 1.2470/75. Beyond 1.2500 looks unlikely for now but if wrong, look for a test of 1.2555, the 16 Feb high.

On the downside, the initial support will arrive at 1.2350 ahead of the session low of 1.2323, where the daily cloud base will lend support. Below there could reverse towards 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
1.2475 27 Mar high 1.2350 100 HMA
1.2450 Minor 1.2323 Session low /Daily cloud base
1.2421 28 Mar high 1.2299/1.2306 12 Apr low/13 Apr low (Daily Tenkan)
1.2415 (76.4% of 1.2475/1.2215) 1.2250 9 Apr low/Rising trend support
1.2395/94 10 Apr high/Session high 1.2215 6 Apr low

Economic data highlights will include:

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

USDJPY: 107.09
US$Jpy initially tried the upside in reaching 106.70 on Monday before drifting lower to 107.00 and ending the day at 107.10, right on the Daily cloud base/Daily Tenkan
1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning higher Weekly Indicators:  Turning higher
Preferred Strategy:  The daily momentum indicators retain a constructive bias and the weeklies are also now turning higher so sentiment does look to be improving for US$Jpy despite the fact that the short term charts look a bit heavy, 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 107.30 would find offers at 107.60 (Session high), at 107.75 and then again at the mid-February high at 107.90.  Above here, 108.10 would then be a target, beyond which could see a move to 108.45/50.

On the downside, buyers will be seen at current levels 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 @ 106.70. SL @ 106.30, TP @ 107.70

Resistance Support
108.10 (38.2% of 113.75/104.60) 107.10 Daily cloud base/Daily Tenkan
107.90 21 Feb high 107.00/03 200 HMA /Session low
107.75 13 Apr high 106.61/64 9/10 Apr lows /11 Apr low
107.60 Session high 106.55 (38.2% of 104.60/107.75)
107.30 Minor 106.20 (50% of 104.60/107.75)

Economic data highlights will include:

Industrial Production, Capacity Utilisation

GBPUSD: 1.4343
Cable traded higher again on Monday in reaching 1.4343, coming within 2 pips of the 2018/post-Brexit high, before closing the day at 1.4335. The expected UK rate hike in May is underpinning Sterling, with a 25bp hike priced in at 74% although on a more cautious note, Brexit negotiations resume this week and may temper gains. There is a string of important UK data this week, including the Unemployment today, and then the CPI, wage growth and Retail Sales, later in the week.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:  Turning higher?
Preferred Strategy:   Although Cable has so far been unable to overcome at the highs on 13 Apr, the dailies do look positive and if the Jan (2018) high of 1.4346 is overcome, there is then little to stop a run at the post-Brexit high 1.5017

In the meantime, the hourly charts now look a little overbought and hint at a possible dip, but overall the preference is to look to buy dips at around 1.4270/80, below which could return to the session low at 1.420/30.

Buy GbpUsd @ 1.4270. SL @ 1.4220, TP @ 1.4400

Resistance Support
1.4500 (50% pivot of 1.7035/1.821) 1.4315 Minor
1.4475 Minor 1.4280 Minor
1.4425 Minor 1.4240 Minor
1.4390 Minor 1.4220/1.4228 13 Apr low /Session low
1.4345/43 25 Jan high/13 Apr high 1.4200 (23.6% of 1.3710/1.4343)

Economic data highlights will include:

UK Unemployment

USDCHF: 0.9595
US$Chf took a dip back below 0.9600 in reaching 0.9577, but  has so far held on to the rising uptrend line, leaving the cautiously bullish outlook unchanged, as long as it does so.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning Neutral Weekly Indicators:   Turning higher
Preferred Strategy:  The short term momentum indicators look fairly neutral on Tuesday, 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 the 100 DMA, at 0.9585 and the session low of 0.9577, the rising trendline is now at 0.9560, which needs to hold. Under here would negate the mildly bullish stance and could see a run back towards 0.9525/35 and possible back to 0.9500.

The daily momentum indicators still look pretty much neutral, but the weeklies look reasonable constructive, and if we do see a turn higher, then above 0.9635/40 we will then run into the strong resistance at the 200 DMA (0.9655) 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
0.9680 200 WMA/Weekly cloud base 0.9585 100 DMA
0.9666 18 Jan high 0.9577 13 Apr low
0.9652/48 200 DMA /6 Apr high 0.9555/60 11 Apr low/4 Apr low / Rising trend support
0.9638 13 Apr high/Session high 0.9534 (23.6% of 0.9187/0.9596)/10 Apr low
0.9600 Minor 0.9526 2 Apr low

AUDUSD: 0.7784
The Aud has traded sideways on Monday (0.7751/82) but is ending at the highs, with the next direction to come via the RBA Minutes, China Retail Sales, Industrial Production and GDP-Q1, all due today.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning higher Weekly Indicators:  Neutral
Preferred Strategy:   The Aud looks a little mixed on Tuesday, with the short term momentum indicators in neutral but with the dailies looking quite positive.

If the upside prevails, then we could be in for a sterner test of 0.7785/90 beyond which could run back to 0.7800/10. Beyond here could see a run towards 0.7850 and then eventually to 0.7900.

The downside looks reasonably well underpinned at 0.7755/65 today but 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, 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 @ 0.7855, TP @ 0.7745

Resistance Support
0.7850 (76.4% of 0.7916/0.7642) 0.7765 100 HMA
0.7825 Minor 0.7751 Session low
0.7810/08 200 DMA /(61.8% of 0.7916/0.7642) /13 Apr high 0.7745 (38.2% of 0.7574/0.7808) /200 WMA
0.7788 100 DMA 0.7737/35 12 Apr low/200 HMA
0.7783 Session high 0.7705 (61.8% of 0.7574/0.7808)

Economic data highlights will include:

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

NZDUSD: 0.7364
 The Kiwi had a choppy session on Monday, opening in NY just above the lows of 0.7333 before US$ weakness allowed the Kiwi to lift sharply, underpinned by improving risk sentiment in reaching a high of 0.7370 and closing nearby. As with the Aud, the Chinese data will likely drive direction today, with the Global Dairy Trade Index due later in the session.
1 hour/4 hour indicators: Neutral Daily Indicators:  Turning higher Weekly Indicators:  Turning Neutral
Preferred Strategy:   The short term momentum indicators look neutral on Tuesday, requiring a neutral stance although the dailies do appear to be turning a little higher.

On the downside, the initial support will be seen at 0.7350/45, ahead of the session lows and 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 the 13 April high of 0.7395. Above 0.7400 could eventually see a run towards the 16 Feb high at 0.7436, albeit not today and I prefer to sell into strength if we do see it above 0.7400.

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

Resistance Support
0.7450 Minor 0.7345 Minor
0.7436 16 Feb high 0.7338/33 (23.6% of 0.7153/0.7395) /Session low
0.7410 19 Feb high 0.7320 Minor
0.7395 13 Apr high 0.7302 (38.2% of 0.7153/0.7395)
0.7370 Session high 0.7275 (50% of 0.7153/0.7395)

Economic data highlights will include:                                                          

Global Dairy Trade Index