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

By | April 18, 2018


EURUSD: 1.2372
EurUsd had a squeeze higher in early Europe on Tuesday, reaching 1.2413 before the ZEW disappointed traders, sending the Euro down to 1.2335, since when it has retraced some of the losses to finish unchanged on the day, at 1.2370. Wednesday will look to the EU CPI for guidance (exp 0.9%mm, 1.5%yy (Core 1.4%yy)).
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 mildly lower today, and on the downside, the initial, minor support will arrive at 1.2350 ahead of the session low at 1.2335 and the 16 Apr low of 1.2323, where the daily cloud base continues to 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 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 of 1.2200 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.

On the topside, minor resistance will again be seen at 1.2400, above which we could then head back towards 1.2415/20 and even towards 1.2470/75. Beyond 1.2500 looks unlikely for now, but if wrong a test of 1.2555, the 16 Feb high could be the eventual result.

On 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 1.2335/27 16 Apr low/  Daily cloud base
1.2421 28 Mar high 1.2299/1.2306 12 Apr low/13 Apr low (Daily Tenkan)
1.2415/13 (76.4% of 1.2475/1.2215)/16 Apr high 1.2250 9 Apr low/Rising trend support
1.2300 Minor 1.2215 6 Apr low

Economic data highlights will include:

EU CPI, German Wholesale Price Index, EIA weekly crude oil stock change

USDJPY: 107.01
US$Jpy has been choppy in a narrow range as it continues to hover between the Daily cloud base/Daily Tenkan and leaving the outlook unchanged.  All eyes today will be on the Trump-Abe talks that end tomorrow and on the N Korean situation.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning higher Weekly Indicators:  Turning higher
Preferred Strategy:  The daily momentum indicators retain a mildly constructive bias and the weeklies are also now turning higher so sentiment does look to be improving for US$Jpy despite the fact that the short term charts look slightly heavy, so a fairly neutral stance is again required, but technically, buying dips still seems to be the plan.

On the topside, back above the session high at 107.20, and minor resistance at 107.35, would find offers at 107.60 (16 Apr 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 towards the session low at 106.87, 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
107.90 21 Feb high 106.87 Session low /Daily cloud base
107.75 13 Apr high 106.61/64 9/10 Apr lows /11 Apr low
107.60 16 Apr high 106.55 (38.2% of 104.60/107.75)
107.35 Minor 106.20 (50% of 104.60/107.75)
107.20 Session high /Daily Tenkan 106.00 Minor

Economic data highlights will include:

Merchandise Trade Balance

GBPUSD: 1.4291
Cable initially traded higher again on Tuesday in reaching 1.4376, a new post-Brexit high, before turning lower after the release of the UK jobs data, with traders seen to be taking profit after the recent strong rise. The expected UK rate hike in May will continue to underpin Sterling, so the downside looks limited, with a 25bp hike now pretty much priced in. On a more cautious note, Brexit negotiations resume this week and may temper gains.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:  Turning higher?
Preferred Strategy:   Although Cable failed at the highs on Tuesday, the dailies do look positive and if 1.4375 can be taken out then we are left looking at a test of 1.44/1.45, 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, back below 1.4280 would hint at a possible to the Fibo levels at 1.4220, and then to 1.4200 and 1.4160 ahead of more substantial, Fibo support at 1.4120.

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 another test of 1.4300, and above.

On a more cautious mote, it could be that the daily charts are now showing some bearish divergence, hinting that a medium term top may already be in place and I do not think we are going back above 1.4375 today, so for a day trade, I would look to sell a rally towards 1.4350 with a SL at 1.4380.

Otherwise, I prefer to trade Cable through the cross, so:

Sell EurGbp @ 0.8690. SL @ 0.8715, TP @ 0.8590

Sell GbpUsd @ 1.4350. SL @ 1.4380, TP @ 1.4250

Resistance Support
1.4475 Minor 1.4282 Session low
1.4425 Minor 1.4240 Minor
1.4390 Minor 1.4220 13 Apr low /(23.6% of 1.3710/1.4343)
1.4376 Session high 1.4200 Minor
1.4320 Minor 1.4185 200 HMA

Economic data highlights will include:


USDCHF: 0.9667
US$Chf had a decent squeeze higher on Tuesday, care of a strong rally higher in EurChf which is closing in on 1.2000 (today moving from 1.1875 to 1.1950). US$Chf moved up from 0.9580 to 0.9678 where it has fallen just short of the 200 WMA and settled on the 200 DMA.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning Neutral Weekly Indicators:   Turning higher
Preferred Strategy:  The short term momentum indicators look positive for further gains and there is no change to the view of trading from the long side, and as long as we remain above the rising trend support, I prefer to buy the dips.

If the dollar falls back below minor support at 0.9640 we could see a return to 0.9600, although that currently looks unlikely, but below which, strong support will arrive at 0.9580/70 and then again at the Fibo level at 0.9560.

The longer term momentum indicators still look pretty much neutral but may be picking up speed, and if we do see a turn higher, then the 200 WMA/Weekly cloud base  (0.9690/95) will provide resistance, but above 0.9700 would open 0.9715 and then 0.9760.

Resistance Support
0.9740 Minor 0.9640 Minor
0.9710 (61.8% of 1.0037/0.9187) 0.9600 200 HMA
0.9690/95 200 WMA/Weekly cloud base 0.9585/80 100 DMA /Session low
0.9678 Session high 0.9577/70 13 Apr low/ Rising trend support
0.9655 200 DMA 0.9560 (23.6% of 0.9187/0.9678)

AUDUSD: 0.7772
The Aud was pretty much rangebound within the range of 0.7760/90 on Tuesday, leaving the outlook unchanged.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning higher Weekly Indicators:  Neutral
Preferred Strategy:   The Aud looks a little mixed again on Tuesday, with the dailies still looking quite positive, while the short term momentum indicators look a little heavy.

If the positive look from the dailies prevails, then we could be in for another run to 0.7790 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 0.7760, bids would arrive at 0.7750/45, with further support seen 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.


Resistance Support
0.7850 (76.4% of 0.7916/0.7642) 0.7760 Session low
0.7825 Minor 0.7751 16 Apr 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
0.7788/90 100 DMA /Session high 0.7737/35 12 Apr low/200 HMA
0.7775 Minor 0.7705 (61.8% of 0.7574/0.7808)

Economic data highlights will include:                                                 

WBC Leading Index

NZDUSD: 0.7342
 As with the Aud, the Kiwi had a choppy session and has finished 10 points away from the previous close after a range of 0.7325/72. The Kiwi found a base after the release of the Global Dairy Trade Index: GDT PI +2.7% & WMP +0.9%,
1 hour/4 hour indicators: Neutral Daily Indicators:  Turning higher Weekly Indicators:  Turning Neutral
Preferred Strategy:   The short term momentum indicators look mixed today, while the dailies are suggesting that the Kiwi could be forming a near term topping formation so selling rallies remains preferred for now

If so, on the downside, the initial support will be seen at 0.7325, ahead of the Fibo levels at 0.7300 and 0.7275.

On the other hand, if the Kiwi does continue its run higher, the initial resistance will arrive at around 0.7375 ahead of the 13 Apr high of 0.7395. I don’t think we head back up here today, but if wrong look for a run to 0.7400/10, above which could eventually see a run towards the 16 Feb high at 0.7436, albeit doubtful.

Resistance Support
0.7450 Minor 0.7338 (23.6% of 0.7153/0.7395)
0.7436 16 Feb high 0.7325 Session low
0.7410 19 Feb high 0.7302 (38.2% of 0.7153/0.7395)
0.7395 13 Apr high 0.7275 (50% of 0.7153/0.7395)
0.7372 Session high 0.7245 (61.8% of 0.7153/0.7395)