19 Jan: Forecast: FX: US$/Majors + trade ideas

By | January 19, 2018

US data misses and keeps pressure on the dollar, while the chance of a budget shutdown is also weighing on the downside. Sterling remains in favour as optimism over a favourable Brexit outcome continues to grow.

  • US Initial Jobless Claims, 220k v 261k prev
  • US Jobless Claims 4-wk Avg, 244.50k v 250.75k prev
  • US Continued Jobless Claims, 1.952M v 1.867M prev
  • US Dec Building Permits:, 1.302M v 1.303M prev
  • US Dec Building Permits: Change MM, -0.1% v -1.0% prev
  • US Dec Housing Starts Number MM, 1.192M v 1.297M prev
  • US Dec House Starts MM: Change, -8.2% v +3.3% prev
  • Confusion reins as U.S. Republicans toil to reach deal to avert shutdown
  • German union backs SPD bid to start formal coalition talks
  • German property boom to boost construction sales to 23-year high
  • France, Germany to make joint Bitcoin regulation proposal at G20 summit
EURUSD: 1.2239
EurUsd has chopped sideways in NY around current levels after earlier recovering from a 1.2165 low and in the absence of any major data today, it looks likely to be fairly steady again while waiting to see whether the US Government faces a shutdown, in which case the US$ would come under renewed pressure. Also in focus will be the weekend vote in Germany, where the Social Democrats (SPD) are expected to vote on coalition with Chancellor Angela Merkel’s CDU/CSU on Sunday.
1 hour/4 hour indicators: Neutral Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  A neutral stance seems wise heading into Friday trade although the longer term charts do still point to higher levels ahead. Good offers will once again arrive in the 1.2280/1.2320 area while a break below 1.2165 would open the way towards 1.2140. German PPI, EU Current Account and the Michigan Consumer Sentiment Index will be the economic interest today.
Resistance Support
1.2335 Minor 1.2200 Minor
1.2322 17 Jan high 1.2165 17 Jan low
1.2300 Minor 1.2140 23.6% of 1.1553/1.2219
1.2275 H/S Neckline 1.2120 Minor
1.2264 Minor 1.2100 Minor

Economic data highlights will include:                                      

German PPI, EU Current Account, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count

USDJPY: 111.04


US$Jpy has chopped around either side of 111.00 for much of Thursday, and more of the same looks likely until the US session.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  A neutral stance is required on Friday although the medium term charts do hint that the dollar will remain under some pressure heading into next week.
Resistance Support
112.20 100 DMA 110.68 Session low
112.00 Minor 110.50 Minor
111.70 200 HMA /200 DMA 110.19 17 Jan low
111.47 Session high 110.05 Rising trend support
111.25 Minor 109.90 100 WMA

GBPUSD: 1.3892
Sterling has had another volatile session but is ending the day higher, both against the dollar and in the crosses, on some positive Brexit speculation.  The latest leg in Sterling’s rally has been underpinned by the approval of the Brexit bill in the House of Commons. The bill aims to incorporate European Law into British Law to ensure a smooth transition.
1 hour/4 hour indicators: Turning higher Daily Indicators: Up Weekly Indicators:  Up
Preferred Strategy:  The momentum indicators generally look positive but Cable remains volatile so caution is warranted. Buying dips seems to be the theme though, with a SL placed back below 1.3800. UK Retail Sales are due today (exp -0.6%mm, +3%yy)

Buy GbpUsd @ 1.3800. SL @ 1.3760, TP @ 1.3990

Resistance Support
1.4050 Minor 1.3870 Minor
1.4000 Psychological 1.3850 Minor
1.3975 Minor 1.3825 Minor
1.3942 17 Jan high 1.3805 Session low
1.3913 Session high 1.3756 17 Jan low

Economic data highlights will include:

UK Retail Sales

USDCHF: 0.9589
US$Chf traded a choppy 0.9574/0.9665 range on Thursday, and with the momentum indicators mixed a cautious stance is required.
1 hour/4 hour indicators: Neutral – Turning higher? Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  The daily charts still look heavy but the 4 hour momentum indicators may be building a basing formation and we now have a minor triple bottom at 0.9572/75. If this holds we could then see a retest of the 0.9650/65 area, above which could see a return towards 0.9700/20. If 0.9570 gives way, look for a dip towards 0.9550, which should be strong, but below which would open the way to 0.9500.
Resistance Support
0.9680 23.6% of 1.0004 /0.9572 0.9572 17 Jan low
0.9665 Session high 0.9550 100 MMA /Rising trend support
0.9650 17 Jan high 0.9515 Minor
0.9625 Minor 0.9500 Minor
0.9600 Minor 0.9485 Minor

AUDUSD: 0.7998
 AudUsd is trading back at 0.8000 after a dip in Asian trade to a low of 0.7941 but underpinned by the good China growth figures seen last night (Q4 GDP +6.9%). The momentum indicators do generally point higher and a retest of yesterday’s 0.8022 may be on the cards, above which would allow 0.8035/0.8055. There is no data due today, so a rangebound session near 0.8000 looks more likely.
1 hour/4 hour indicators: Neutral Turning higher? Daily Indicators: Up Weekly Indicators:  Neutral
Preferred Strategy:  The longer term uptrend remains firmly intact, so buying dips is probably still the plan although the short term momentum indicators are showing some bearish divergence and  a cautious stance is warranted. Stand aside today.
Resistance Support
0.8102 20 Sept high 0.7980 Minor
0.8080 Minor 0.7960 Minor
0.8055 200 MMA 0.7940 17 Jan low
0.8036 21 Sept High 0.7925 Minor
0.8022 17 Jan high 0.7900/10 23.6% of 0.7510/0.7998 / Rising trend support

NZDUSD: 0.7309
The Kiwi is trading at 0.7300, below the new trend high at 0.7330 seen in the previous session, but well above the session low of 0.7245. More trade within the range looks likely although the Business PMI is due shortly.
1 hour/4 hour indicators: Neutral Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  While the medium term charts look constructive for further gains, the short term momentum indicators are inconclusive and show a degree of bearish divergence so stay neutral for now.
Resistance Support
0.7400 Minor 0.7285 Minor
0.7375 (76.4% of 0.7557/0.6780) 0.7260 Minor
0.7360 Minor 0.7245 Session low
0.7343 22 Sept high 0.7215 Minor
0.7330 17 Jan high 0.7200 (23.6% of 6780/0.7330)