19 July: Forecast: FX: US$/Majors

By | July 19, 2017


EURUSD: 1.1550
24 Hour Outlook: Prefer to buy dips Medium Term: Prefer to buy dips.
Preferred 24-hour Strategy: Prefer to buy dips towards 1.1500 looking for a run to 1.1600+. SL under 1.1470.

Having broken above 1.1500 in early Asian trade yesterday, following the announcement of the failure to pass the US healthcare bill, the Euro has maintained its gains and would now appear to be headed for the May 2016 high of 1.1616, beyond which there is little to stop it heading on to the August 2015 spike high of 1.1713.

The hourly charts are looking to correct a little, after having become overbought, and if the dollar does recover we can expect to see buyers at 1.1500 and again at the session low of 1.1470. Under there, although unlikely today, could then see a return to Monday’s low of 1.1435, to Friday’s  low  (1.1390) and the 13 July low of 1.1370, below which could then run towards 1.1345/50 and then to 1.1310/15.

Resistance Support
1.1713 23 Aug 2015 high 1.1535 Minor
1.1675 Minor 1.1510 Minor
1.1616 2 May 16 high 1.1470 Session low /(23.6% of 1.1126/1.1582)
1.1600 Psychological 1.1434 17 July low
1.1582 Session high 1.1390 14 July low

Economic data highlights will include:

EU Construction Orders, Building Permits, Housing Starts EIA Crude Oil Stocks Weekly Change

USDJPY: 112.08
24 Hour Outlook: Neutral Medium Term: Neutral -Look to buy dips @ 111.30/70
Preferred 24-hour Strategy: Look for 111.70/112.30 to cover it ahead of the BOJ tomorrow unless US politics provides another directional move. The US Senate’s McConnell has just said that the Senate will vote on repeal of Obamacare early next week. At this stage there is no reaction and it could be that the 100 WMA at 112.05 continues to act as a short term magnate.

US$Jpy has been heavy for much of Tuesday and fell to a low of 111.68, where the strong support has held it up and allowed a bounce to 112.00.

The short term momentum indicators are now mixed and 111.70 may well hold the dollar up again in the coming session. If wrong,  below that as we said before, the monthly cloud top is rising sharply and currently lies at 111.30, and should also see strong bids, but below which could then see a run to 111.00 and to 110.65.

On the topside, the daily charts are pointing increasingly lower, but if we do see a near term bounce, then 112.30 and 12.65/70 will provide the initial resistance. If we get back above the 17 July high of 112.85 minor offers will arrive at various points (113.00/25) ahead of  14 July’s high at 113.57.

Resistance Support
113.08 (50% of 114.50/112.68) 111.72 100 DMA/200 DMA
112.85 17 July high 111.68 Session low
112.75 (38.2% of 114.50/112.68) 111.30/25 (50% of 108.12/114.49)/200 WMA
112.67 Session high 110.98 (61.8% of 108.80/114.49)
112.33 (23.6% of 114.50/112.68) 110.64 16 June low

GBPUSD: 1.3036
24 Hour Outlook: Neutral Medium Term: Prefer to buy dips
Preferred 24-hour Strategy: Neutral. Range trade 1.30/1.31?

Cable extended lower, from the new 10 month high of 1.3126, to a low of 1.3004 after the soft UK June CPI data before bouncing following Carney’s supportive comments in stating that his view has not changed because of the soft CPI reading.

The momentum indicators are a mixed again on Wednesday and a cautious stance is required. Currently sitting on the previous pivot of 1.3045, we could chop around here today. On the downside, the session low of 1.3004 will provide the initial support, but a break of 1.3000 could have us quickly back 1.2980, below whish could then head to the 14 July’s low of 1.2933 although this seems unlikely today.

On the topside, back above 1.3100 would see good sellers once again at 1.3115/25, but above which there is little to stop Cable heading on towards 1.3200 and then to 1.3280. Above there would be increasingly bullish, possibly opening up the major Fibo pivot at 1.3420 (50% pivot of 1.5017/1.1821) although this currently remains over the horizon.

Resistance Support
1.3200 Minor 1.3004 Session low
1.3150 Minor 1.2980 Minor
1.3125 Session high 1.2950 200 HMA
1.3100 Minor 1.2920 (38.2% of 1.2589/1.3125)
1.3060 Minor 1.2900 Minor

USDCHF: 0.9550
24 Hour Outlook: Prefer to sell rallies Medium Term: Neutral
Preferred 24-hour Strategy: Neutral. Prefer to sell rallies towards 0.9600 with a SL above 0.9640.

US$Chf is at a new 12 month low after breaking down through the decent support in the 0.9590/0.9600 area, which now becomes near term resistance.

Currently sitting at 0.9550, right on the 200 WMA after having recovered from the 0.9523 session low, the short term momentum indicators are mixed although the overall outlook remains for further dollar weakness in the days ahead.  If so, below the session low could see a run to 0.9500 and potentially a fair bit lower, where the first real support is seen at the May 2016 low at 0.9442.

On the topside, 0.9590/0.9600 will now see sellers, above which could return to the session high of 0.9634 although this seems rather doubtful. If wrong, above here could see a return to the 0.9675/85 minor resistance beyond which would revisit Friday’s high of 0.9700.

Resistance Support
0.9785 Minor 0.9523 Session low
0.9665 Minor 0.9500 Minor
0.9634 Session high 0.9475 Minor
0.9590 Minor 0.9442 3 May 2016 low
0.9555 200 WMA 0.7400 Minor

AUDUSD: 0.7912
24 Hour Outlook: Neutral Medium Term: Neutral
Preferred 24-hour Strategy: Neutral. At these levels, the urge is to sell the Aud although the market appears to be caught very short, so caution is warranted, and a move to test the market at 0.8000 could be on the cards.

The RBA sent the Aud into orbit yesterday, shooting themselves in the foot in the process, after the hawkish RBA Minutes which in no way reflected the statement seen after the RBA Meeting last week. Consumer sentiment is not strong and the higher Aud$ is going to squeeze the export market so I cannot believe that this was the outcome that the RBA intended and there is now way rates will be at 3% in the foreseeable future. Anyway the Aud is at 2 year highs, having traded up to 0.7942, and is sitting just below there heading into the NY close. The short term momentum indicators are at overbought extremes, but not wanting to stand in the way of a moving train, further gains could easily see a run towards 0.7975 and then to 0.8015.

Minor support now arrives at 0.7900/10 and then again at 0.7875 and at 0.7840 although it seems unlikely to be seen down here today.

Resistance Support
0.8015 200 WMA 0.7900 Minor
0.8000 Psychological 0.7875 Minor
0.7975 200 MMA 0.7840 Minor
0.7960 Minor 0.7796 (23.6% of 0.7328/0.7942)
0.7942 Session high 0.7785 Session low

Economic data highlights will include:                                      

WBC Leading Economic Index

NZDUSD: 0.7343
24 Hour Outlook: Neutral Medium Term: Neutral
Preferred 24-hour Strategy: Neutral. Range trade 0.7300/0.7400?

Having dived to 0.7260 after the release of yesterday’s soft NZ CPI figure, the bounce was equally quick and eventually saw the Kiwi reach a high of 0.7372, just short of the February high of 0.7375.

The short term momentum indicators do appear to be running out of steam although the dailies remain mildly constructive, and we could yet see a run back to the trend high of 0.7375 above which could then see a run towards 0.7400 although this seems unlikely today.

On the downside the initial (minor) support lies at around 0.7330 ahead of 0.7315 and 0.7300. Below there could then re-open the way to 0.7260 and eventually to the 13 July low of 0.7245.

                                         Resistance             Support
0.7485 7 Sept high 0.7330 Minor
0.7435 Minor 0.7315 100 HMA
0.7402 8 Nov high 0.7300 Minor
0.7375 7 Feb high 0.7285 200 HMA
0.7372 Session high 0.7262 Session low