The US Retail Sales lit a fuse under the dollar on Friday, sending it higher on all fronts as we approach this week’s FOMC decision. There was also some movement in the crosses, and as we said on Friday, the Aud remains under pressure while the Jpy and the Chf saw some safe haven demand because of the political issues in the Middle East. In other markets, the metals saw a spike higher before retreating under some pressure from the stronger dollar. Oil was choppy but rangebound after a couple of days of oversize moves, while the US indices finished a little lower in a sideways session.
EurUsd: The Euro fell sharply on Friday following the US Retail Sales to finish the week at 1.1210, underpinned for now by the Fibo support at 1.1205 (61.8% of 1.1115/1.1346). Given the look of the short term momentum indicators this is not going to last long, in which case we could see a run, below the 6 June low of 1.1200, towards 1.1170 (76.4% of 1.1115/1.1346). A break of this would then open the way to 1.1150 and lower, where 1.1135 is minor support ahead of the 30 May low of 1.1115 and the 23 May spike low of 1.1106. Selling rallies currently seems the plan, with resistance currently to be seen at minor Fibo levels at 1.1235, 1.1255 and 1.1275, ahead of 1.1285, where the 100 HMA/200 HMA are about to cross lower. While selling rallies is the plan, it may be that we end up not doing too much directionally ahead of Wednesday’s Fed meeting, and taking some profit on shorts may limit the downside as we head towards the event.
DXY: (97.45) The DXY broke sharply above the resistance offered by the 100 DMA at 97.00 on Friday and, given the look of the daily momentum indicators, we could now see further gains towards 97.65/75, 98.00 and to the trend high seen on 23 May, at 98.37. On the downside, support will be seen at 97.25 (minor), and then at 97.00 (100 DMA), and further out, at 96.51 (200 DMA).
US$Jpy: is firm at the start of the week, and after having seen a mild dip to 108.15 on Friday the pair ended the week just below its session highs of 108.58. The move up was not as emphatic as some of the other pairs, due to some safe haven demand for the Jpy, but the momentum indicators do look constructive for further gains, where the points of resistance are seen at 108.79 (Wednesday high) and then at 108.88 (23.6% of 112.39/107.80). Above here, 109.00/15 offers resistance, beyond which would run into 109.55 (38.2% of 112.39/107.80). On the downside, support will again be seen at 108.15/20 and at 108.00 ahead of 107.80. This seems unlikely to be seen today, but if wrong, the next target is seen at 107.50 (4 Jan low).
US$Chf: traded higher on Friday, from a low of 0.9925 to reach 0.9995, before closing at 0.9985 but above the 200 DMA at 0.9967. Further gains look possible, although 1.0000 may be a hurdle (38.2% of 1.0237/0.9853), but above which would see a run towards to 1.0035 (100 DMA), 1.0045 (50% of 1.0237/0.9853) and 1.0090 (61.8% of 1.0237/0.9853). On the downside, support will be seen at the 200 DMA, below which would open the way to 0.9945/50, 0.9925 and then to 0.9900. Overall, buying dips is favoured although, as with the Euro, it may be choppy and directionless ahead of the Fed on Wednesday.
AudUsd: The Aud once again traded in a heavy fashion throughout Friday, finishing just above the low of 0.6860, the lowest level since the January 3 flash-crash. The daily momentum indicators seem to be turning lower and, on the downside the initial support will be seen at 0.6860, below which would open the way to January 2016 low at 0.6826. Further out, a move towards 0.6600/0.6700 seems to be on the cards although much will depend on the Fed and the RBA and what monetary policy looks like further down the track.. A rally will find offers at 0.6880/90 (minor), at 0.6900 (23.6% of 0.7020/0.6860) and then at 0.6922 (38.2% of 0.7020/0.6860) although this looks unlikely to be seen again for a while. Trading from the short side is preferred although the downside is likely to continue find support from the strong iron ore price, so the activity will be slow.
NzdUsd: The Kiwi fell sharply on Friday, to reach a low of 0.6487, so far holding on just above the 23 May low of 0.6482. It still looks heavy though and below 0.6480 would target 0.6464 (26 Oct 2018 low) and then 0.6426 (9 Oct ‘18 low). On the topside, resistance will be seen at.6500 (minor), ahead of 0.6525 (minor) and 0.6533 (23.6% of 0.6681/0.6487). Selling rallies with a SL placed above 0.6535 currently seems to be the plan.
On the crosses, the main interest lies once again seems to lie in Jpy and Chf strength, and Aud and Nzd weakness. From a technical perspective:
AudJpy now looks to be headed to 73.00/72.50,and selling rallies seems to be the plan here, with a SL placed above 75.00. The same applies to NzdJpy; look to sell rallies towards 70.70 with a SL above 71.00 and a target of somewhere around 69.50.
EurGbp looks a bit toppish on the daily charts and although I am avoiding Sterling, the cross may be a sell at around 0.8930, with a SL placed above 0.8980.
AudNzd may have a bit of upside momentum, so looking to buy dips near 1.0550 with a SL at 1.0490 and a target of 1.0625 may be a plan.
EurChf may have some mild downside momentum as Chf safe haven demand persists but in the longer term I prefer to buy dips, looking for a move back towards 1.1270/1.1300
Gold: briefly made a new 14 month high on Friday, spiking up to 1358, before reversing sharply to finish the week, unchanged on the day, at 1341. Given the current US$ strength, and also from the look of the short term momentum indicators, the downside now seems to be the weakest link for the next 24 hours, and if so, look for support to arrive at 1330/35 ahead of 1326 (38.2% of 1275/1358) and 1319 (11 June low). On the topside, resistance will be seen at 1350 and at 1358/60, which should be strong, and I doubt we see it again ahead of the Fed meeting. Selling rallies, with a tight SL placed above 1360 would seem to be the short term plan.
Silver: as with Gold, Silver spiked higher on Friday, to reach15.11 before a sharp retreat to currently sit at 14.86, and below the 200 DMA, which was briefly taken to, at 14.90. The short term momentum indicators now look rather heavy and a return to minor support at 14.65 would not surprise although the price action does seem set to remain rather choppy. Below 14.65 would allow for 14.50 and the recent low at 14.30, albeit probably not ahead of the Fed on Wednesday. The dailies look mildly constructive though and above the 200 DMA would open the way to another run to 15.10 and the 100 DMA at 15.17. Beyond that would want to look at 15.25 (50% pivot of 16.21/14.29) and 15.48 (61.8% of 16.21/14.29). While mildly bearish in the short term, the dailies do not suggest any major move and some choppy conditions may lie ahead.
WTI: remains volatile but currently bracketed between the 10 June high of 54.79 and the double bottom seen at 50.50/60. More of the same seems likely although the daily momentum indicators do seem to be forming a base and trading from the long-side, buying dips with a SL placed below 50.00 is mildly preferred. The topside will find offers at 53.00, 53.40, 54.00 and then at 54.80. Above ugh should see a move towards 56.60 (38.2% of 66.56/50.58) albeit that this is a long way off right now. On the downside, if we do see a break of 50.00, stops could trigger further losses towards 49.00/25 (minor) and then to 48.00 (76.4% of 42.23/66.57).
*Trade of the day: June 17, 2019; 8:27 AM(AET)
*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.
All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.
Sell EurUsd @1.1235. SL @ 1.1265, TP @ 1.1185
Buy EurUsd @ 1.1170. SL @ 1.1140, TP @ 1.1225
Sell AudUsd @ 0.6900. SL @ 0.6940, TP @ 0.6800
Buy US$Jpy @108.20. SL @ 107.90, TP @ 109.00
Sell NzdUsd @ 0.6510. SL @ 0.6545, TP @ 0.6425
Buy US$Chf @0.9945. SL @ 0.9915, TP @ 1.0020