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

By | April 19, 2018


EURUSD: 1.2378
EurUsd had a tight 50 point range on Wednesday after the Eurozone CPI was finalised at 1.4% yy in May, core CPI at 1.0% yy, in line with expectations. It could be a similar session ahead, with little data due heading into the weekend with the Philadelphia Fed Mfg Survey being the main focus today along with various 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 and fairly neutral again today with another sideways session looking the most likely outcome.

On the downside, the initial support will arrive at the session low at 1.2340 ahead of the 17 Apr 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 in trading down to 1.2215 on Apr 6, this area will also remain strong support and 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, the initial 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.

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 1.2341/35 Session low/ 17 Apr low
1.2450 Minor 1.2327/23 Daily cloud base/ 16 Apr low
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
1.2396 Session high 1.2215 6 Apr low

Economic data highlights will include:

EcoFin Meeting, EU Current Account, Philadelphia Fed Mfg Survey, US Jobless Claims,  Fed speakers; Brainard, Quarles, Mester

USDJPY: 107.19
US$Jpy has once again been choppy in a narrow range as it continues to hover between the Daily cloud base/Daily Tenkan, leaving the outlook unchanged.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning higher? Weekly Indicators:  Turning higher
Preferred Strategy:  As before, the daily momentum indicators retain a mildly constructive bias and the weeklies are also turning higher so sentiment does look to be improving for US$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 107.38, 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 near 107.00 towards the 17 Apr 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 106.98 Session 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
107.38 Session high 106.55 (38.2% of 104.60/107.75)
107.20 Daily Tenkan 106.20 (50% of 104.60/107.75)

GBPUSD: 1.4205
GbpUsd initially traded up to 1.4314 on Wednesday ahead of the CPI figure, which missed expectations, sending Cable sharply lower on the back of the recent  underperforming data, in both wages on Tues and CPI today, which has caused a rethink of BoE hike resolve. The UK Retail Sales are due today and a soft number could put another dent in the prospect of a BOE May hike, (exp 0.2%mm, 1.1%yy; Ex-Fuel -1.7%mm, +2.0%yy).
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning lower? Weekly Indicators:  Turning higher?
Preferred Strategy:   Cable seems to have put in a medium term top for now, and with the momentum indicators generally pointing a bit lower, we could now be in for a retest of the 1.4173 session lows, below which would allow a run towards 1.4120 and possibly to 1.4050 although that remains some way off.

On the topside, sellers will arrive today at 1.4215 and then again at 1.4275 ahead of 1.4300.

Further out, if we do take out 1.4315 we could then revisit 1.4375 above which we are left looking at a test of 1.44/1.45, and there is then little to stop a run at the post-Brexit high 1.5022 although that is now a long way off.

Take a nimble stance today, but technically is does appear that further downside pressure may come about.

Resistance Support
1.4376 17 Apr high 1.4200 Minor
1.4310 Minor 1.4172 Session low
1.4275 100 HMA 1.4150 Minor
1.4245 Minor 1.4120 (38.2% of 1.3710/1.4376)
1.4215 200 HMA 1.4100 Minor

Economic data highlights will include:

UK Retail Sales

USDCHF: 0.9684
US$Chf had another squeeze higher on Tuesday, care of a further rally in EurChf, which is closing in on the previous floor of 1.2000 (today moving from 1.1945 to 1.1992). US$Chf moved up from 0.9650 to 0.9698 where it has come up against the 200 WMA but remains above 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.

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

If the dollar falls back below the 200 DMA/Session low at 0.9655/50, stops would be triggered and we could see a return to 0.9600, although that currently looks unlikely, but below which, further strong support will arrive at 0.9575/85.

Buying dips towards 0.9650 is preferred. SL @ 0.9620

Resistance Support
0.9800 Minor 0.9655/50 200 DMA /Session low
0.9760 Minor 0.9625 Minor
0.9740 Minor 0.9600 Minor
0.9710 (61.8% of 1.0037/0.9187) 0.9585/80 100 DMA /17 Apr low / Rising trend support
0.9690/95/98 200 WMA/Weekly cloud base/Session high 0.9577/75 13 Apr low /(23.6% of 0.9187/0.9698)

AUDUSD: 0.7784
The Aud, fell to 0.7644 in early Europe but then bounced as the US$ weakened and moved sharply higher in the US session, extending gains to 0.7797 before drifting off to 0.7780 at the end of the day,  leaving the outlook unchanged. The Australian March jobs data is the focus today, with both the employment and unemployment rate forecast to improve (exp +25K, 5.4%, PR-65.6%). If so, expect a decent test of 0.7800/10 and higher.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher Weekly Indicators:  Neutral
Preferred Strategy:   The Aud looks a little mixed again on Tuesday, with the dailies still looking quite constructive, while the short term momentum indicators look mixed.

If the positive look from the dailies prevails, then we could be in for another run to 0.7795/00 and then back to 0.7800/10, above which could see a run towards 0.7850 and then to 0.7900.

If we head back below minor support 0.7770, stronger 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. Wait for the jobs data to find out.

Resistance Support
0.7850 (76.4% of 0.7916/0.7642) 0.7770 100 HMA
0.7825 Minor 0.7760 Minor
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/Session low
0.7997 Session high 0.7737/35 12 Apr low/200 HMA
0.7788 100 DMA 0.7705 (61.8% of 0.7574/0.7808)

Economic data highlights will include:                                                 

NAB Business Confidence/Conditions – Q1, Australian Unemployment

NZDUSD: 0.7315
 The Kiwi fell hard in early Europe, reaching 0.7303 ahead of a bounce to 0.7344 and then settling the day in the middle of the range, at 0.7320, while waiting on the CPI, due shortly, (exp 0.5%qq, 1.1%yy).
1 hour/4 hour indicators: Mixed. Daily Indicators:  Turning lower? Weekly Indicators:  Turning Neutral
Preferred Strategy:   The short term momentum indicators look mixed today, but they may be hinting at lower levels ahead. All will depend on the CPI but a poor outcome would see a retest of 0.7300, below which would open the way to 0.7275 and 0.7245.

On the other hand a decent CPI outcome would allow a return to 0.7345/50 and then possibly on to 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
0.7436 16 Feb high 0.7302 (38.2% of 0.7153/0.7395) /Session low
0.7410 19 Feb high 0.7275 (50% of 0.7153/0.7395)
0.7395 13 Apr high 0.7245 (61.8% of 0.7153/0.7395)
0.7372 17 Apr high 0.7225 Minor
0.7344 Session high 0.7210 (76.4% of 0.7153/0.7395)

Economic data highlights will include: