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

By | April 20, 2018


EURUSD: 1.2343
EurUsd had a choppy session on Thursday, largely pushed around by the crosses but a slightly firmer US$ at the end of the session has seen the Euro close back in the daily cloud, with the momentum indicators looking a little heavy. The German March PPI and EU April consumer confidence will be data risks today along with several CB speakers.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The short term momentum indicators looking a little heavy today although 1.2320/25 remains intact, but below which would head towards 1.2300/05 and then to 1.2275, where the rising trend support should remain strong support.  A break of this would then allow a return to 1.2215, the low seen on Apr 6, which 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 which would target 1.2085 and possibly 1.2025 although this remains over the horizon for now.

On the topside, the initial resistance will now be seen at 1.2350 and at 1.2375 ahead of 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.

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.

Resistance Support
1.2421 28 Mar high 1.2327/23 Session low  /16 Apr low
1.2415/13 (76.4% of 1.2475/1.2215)/16 Apr high 1.2299/1.2306 12 Apr low/13 Apr low
1.2399 Session high 1.2275 Rising trend support
1.2370 Minor 1.2250 9 Apr low
1.2350 Daily cloud top/Daily Tenkan 1.2215 6 Apr low

Economic data highlights will include:

IMF Meeting, German PPI, EU Provisional Consumer Confidence – April,

USDJPY: 107.43
US$Jpy has once again been choppy in a narrow range (107.18/51) but overall the pair remains firm, despite weaker equities on Thursday, and shows signs of looking like US$Chf given the series of higher highs/lows.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning Neutral? Weekly Indicators:  Turning higher
Preferred Strategy:  As before, the daily momentum indicators retain a mildly constructive bias and the weeklies are also turning higher so sentiment does look to be improving for US$Jpy although the short term charts look neutral, 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 of 107.51, would find offers nearby, at 107.60 (16 Apr high), at 107.75 and then again at the mid-February high at 107.90.  Above here, 108.05/10 would then be a target, beyond which could see a move to 108.45/50.

On the downside, buyers will be seen at 107.15 and at 107.00 and then at the 17 Apr low at 106.87, ahead of good support at 106.55/65. Below here 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 @ 107.00. SL @ 106.55, TP @ 108.05

Resistance Support
108.08 (38.2% of 113.75/104.60) 107.18 Session low
107.90 21 Feb high 106.98 18 Apr low
107.75 13 Apr high 106.87 17 Apr low /Daily cloud base
107.60 16 Apr high 106.61/64 9/10 Apr lows /11 Apr low
107.51 Session high 106.55 (38.2% of 104.60/107.75)

Economic data highlights will include:

National Japan CPI

GBPUSD: 1.4081
Cable was hit by the combination of a dovish Carney and another poor data report, with the UK retail sales missing expectation and leaving the topside breakout earlier in week looking like a major false break. Having just about survived the RS figure, Cable had pretty much held on to 1.4200 but then collapsed when Carney spoke, prevaricating on the timing of possible rate hikes after a May increase had been pretty much written in, sending Sterling down another 140 points to close near the lows of 1.4068.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning lower? Weekly Indicators:  Turning higher?
Preferred Strategy:   Cable almost reached our 1.4050 target much quicker than expected, and mow looks capable of reaching the 6 month rising trend support level at 1.4010/15, with a break of 1.4000 allowing a run back to 1.3965.

On the topside, sellers will arrive today at minor levels at 1.4100 and 1.4125 ahead of Fibo levels at 1.4140 and 1.4185 although this looks unlikely to be seen. If wrong, then above 1.4200 would open the way to return to 1.4220 and 1.4260 ahead of 1.4300.

Take a nimble stance today, but technically is does appear that further downside pressure may come about, looking for a run towards 1.4010/15.

Resistance Support
1.4255 (61.8% of 1.4376/1.4068) 1.4068 Session low
1.4225 200 HMA 1.4043 (50% of 1.3710/1.4376)
1.4185 (38.2% of 1.4376/1.4068) 1.4015 Rising trend support
1.4140 (23.6% of 1.4376/1.4068) 1.4000 Minor
1.4125 Minor 1.3965 (61.8% of 1.3710/1.4376)/5 Apr low

USDCHF: 0.9714
US$Chf had another squeeze higher on Thursday; care of a further rally in EurChf, which is finally hit 1.2000 (today moving from 1.1957 to 1.2001). US$Chf moved up from 0.9666 to 0.9723 before closing at 0.9715.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:   Turning higher
Preferred Strategy:  The short term momentum indicators still 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.

The longer term momentum indicators look as though they may be picking up a bit of speed, and having broken above the 200 WMA/Weekly cloud base (0.9690/95) we could now be in for a move towards 0.9765 although we do need to close the week above 0.9695 to add confidence to this view.

If the dollar falls back below the 0.9690 we could then see a return to the 200 DMA/18 Apr low at 0.9655/50, below which stops would be triggered and we could see a return to 0.9600, although that currently looks unlikely.

Buy US$Chf @ 0.9695. SL @ 0.9645, TP @ 0.9765

Resistance Support
0.9800 Minor 0.9690 200 WMA/Weekly cloud base
0.9765 (50% pivot of 1.0343/0.6187) 0.9666 Session low
0.9740 Minor 0.9655/50 200 DMA /18 Apr low
0.9723 Session high 0.9590 (23.6% of 0.9187/0.9723/ Rising trend support
0.9710 (61.8% of 1.0037/0.9187) 0.9585 100 DMA

AUDUSD: 0.7727
The Aud had a choppy ride on Thursday with plenty of 2 way activity following the underwhelming jobs data, but ultimately, after making a high of 0.7812, where it ran into strong technical resistance, it has fallen sharply, to a low of 0.7618 and thus making a bearish key day reversal in the process.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning Neutral Weekly Indicators:  Neutral
Preferred Strategy:   The Aud has had a major turn around since the US session, and having opened just below 0.7800 it is now back at 0.7725, under pressure from the firmer US$/yields and softer commodities which have given up their previous gains

The key-day reversal suggest further downside pressure and  if we take out the session low, then look for a run  back to 0.7705/0.7690 (10 April low – 0.7693). Under there, the Aud has previously found a medium term base in the 0.7640/50 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.

Sell AudUsd @ 0.7740. SL @ 0.7770, TP @ 0.7640

Resistance Support
0.7850 (76.4% of 0.7916/0.7642) 0.7718 Session low
0.7810/12 200 DMA /(61.8% of 0.7916/0.7642) /Session high 0.7707 (61.8% of 0.7574/0.7812)
0.7788 100 DMA 0.7682 (76.4% of 0.7574/0.7812)
0.7760 200 HMA 0.7652 9 Apr low
0.7745 200 WMA 0.7640 100 DMA / 29 Mar low

NZDUSD: 0.7269
 The Kiwi was dragged lower by the Aud, finally breaking 0.7300 and reaching a low of 0.7260.
1 hour/4 hour indicators: Turning lower. Daily Indicators:  Turning lower Weekly Indicators:  Turning Neutral
Preferred Strategy:   The short term momentum indicators look heavy today, and seem to be hinting at lower levels ahead. If so, good support lies in the 0.7245/50 area, a break of which could see an acceleration towards 0.7210 and eventually towards 0.7185.

On the other hand a topside squeeze would allow a return to 0.7300 and even to the session high of 0.7343 where 0.7345/50 remains decent resistance. Beyond this could eventually return to 0.7375 ahead of the 13 Apr high of 0.7395 although I don’t think we head back up here for a while.

Sell NzdUsd @ 0.7290. SL @ 0.7330, TP @ 0.7190

Resistance Support
0.7395 13 Apr high 0.7260 Session low
0.7372 17 Apr high 0.7245/50 (61.8% of 0.7153/0.7395)/Rising trend support
0.7344/43 18 Apr high /Session high 0.7225 Minor
0.7320 Minor 0.7210 (76.4% of 0.7153/0.7395)
0.7300 Minor 0.7186 29 Mar low