19Apr: Forecast: FX: US$/Majors

By | April 19, 2017


EURUSD: 1.0731

EurUsd has been dragged higher by the move in Cable, even though EurGbp has fallen by 200bp today, and has easily taken out the resistance seen heading towards 1.0700, in rising to 1.0735. Further Euro near term strength looks very possible although, further out, the French presidential election will be an increasing. A recent surge in support for far-left Jean-Luc Melenchon is seen as making it a four way match with far right Marine Le Pen, centrist Emmanuel Macron and conservative François Fillon. The possibility of having two Euro-sceptic candidates, Le Pen and Melenchon, heading to the run-off in May would abruptly cap any major rally in the Euro.

Technically, while the dailies are pretty much flat, while the short term momentum indicators are now pointing sharply higher, suggesting that for the coming session buying dips is probably the plan. On the topside, the initial resistance lies at 1.0735/40, above which could see a run to 1.0775. There is then little resistance to be seen until 1.0825, which should be strong if we get there. Above there though would allow a move to the 27 March high of 1.0905. On the downside, minor support will be seen at 1.0700 and then at 1.0670 and the session low of 1.0636.

While reluctant to structurally trade the Euro from the long side, the short term momentum indicators do point higher and therefore buying dips at around 1.0680/1.0700, with a SL placed below 1.0635, but looking for 1.0825 seems to be a plan today. EU CPI, the main event on Wednesday.

24 Hour: Mildly bullish Medium Term: Neutral
                                          Resistance Support
1.0825 (76.4 of 1.0906/1.0570) /Descending trend resistance 1.0700 Minor
1.0800 Minor 1.0675 Minor
1.0775 (61.8 of 1.0906/1.0570) 1.0638 Session low
1.0737 (50% pivot of 1.0906/1.0570) 1.0602 17 April low
1.0732 Session high 1.0570 10 April low

Economic data highlights will include:

EU CPI (Mar), Trade Balance, US Fed Beige Book, EIA Crude Oil Stocks Weekly Change

USDJPY: 108.43

US$Jpy has been choppy, either side of 109.00 today, but is finishing towards session lows of 108.31, currently near 108.50.

The daily momentum indicators look heavy although the 4 hour charts look less certain on the downside and the base of the channel, currently at around 108.20 may continue to decent provide support. Below the 108.12, 17 Apr low would find further support at 107.80 and 107.50 although I think this unlikely in the short term. On the topside, resistance will be seen at the 200 DMA, which may continue to act as a pivot, at around 108.80, but above which could return to 109.00 and the session high of 109.20.

I remain neutral on US$Jpy although the generally soft outlook for the dollar may keep the pressure on the downside, which would certainly increase of the geo-political tensions increase, with N Korea then main focus.

24 Hour: Neutral Medium Term: Neutral – Possibly prefer to sell rallies
                                         Resistance Support
110.30 200 WMA 108.34 Minor
109.83 (23.6% of 115.50/108.12) 108.20/12 Channel base/17 Apr low
109.65 200 HMA 107.82 (61.8% of 101.18/118.66)
109.21 Session high 107.60 Minor
108.80 200 DMA 107.48 21 July high

GBPUSD: 1.2842

Once Theresa May called for an election, there has been little looking back as Cable soared from 1.2515 to a high of 1.2905, with the prospect of more to come in the days ahead given that the result is likely to consolidate Tory power, reaffirm the Brexit mandate and reduce the internal UK political uncertainties.

The short term momentum indicators are becoming overbought and some consolidation/pullback is likely, but as we said yesterday in the trend table, I think there is potentially a huge upside for Sterling against both the US$ and the Euro (and the Aud) in the weeks ahead. On the topside, resistance will be seen at the session high, above which could see a run towards the important 1.3000 level and Fibo level at 1.3035. In the bigger picture, the large triangle top, currently at 1.3140, will attract – and I think we are going there and then a fair bit higher in the weeks to come. On the downside, minor support will be seen at 1.2800/1.2775 and then again at around 1.2715/20 although this seems unlikely to be seen again in the near term. Buying dips still seems to be the plan.

24 Hour: Prefer to buy dips Medium Term: Bullish
                                         Resistance           Support
1.3034 (38.2% of 1.5019/1.1821) 1.2800 Minor
1.3000 Psychological/55 WMA 1.2770 Minor
1.2950 Minor 1.2750 Minor
1.2905 Session high 1.2717 (23.6% of 1.2108/1.2905)
1.2880 Minor 1.2650 Minor

USDCHF: 0.9961

US$Chf has fallen below the support seen near parity and currently sits near session lows of 0.9954.

While the dailies look neutral, the short term momentum indicators suggest further losses ahead, and if that is the case, look for a decline towards 0.9945 which should be decent support, but below which could then head towards 0.9925 and even to 0.9880. On the topside, resistance will be seen at 0.9990 and then again at around 1.0010. For the time being, trading from the short side, selling rallies seems to be the plan, with a SL paced above 1.0050.

24 Hour: Prefer to sell rallies Medium Term: Neutral
                                         Resistance Support
1.0107 10 Apr high 0.9957 Session low
1.0070 (76.4% of 1.0107/0.9954) /100 DMA 0.9948 30 Mar low /200 DMA
1.0050 (61.8% of 1.0107/0.9954) 0.9925 (61.8% of 0.9818/1.0104)
1.0010 (38.2% of 1.0107/0.9954) 0.9910 Minor
0.9990 (23.6% of 1.0107/0.9954) 0.9882 (76.4% of 0.9818/1.0104)

AUDUSD: 0.7558

Yesterday’s RBA Minutes, despite not saying much that we did not already know, were the catalyst for the Aud to head lower through the session, reaching 0.7533 before a minor bounce to 0.7560 into the US close.

The charts are mixed, and a fairly neutral stance is currently required. While the 4 hour charts still point lower, the dailies still appear to be mildly constructive and therefore, for the coming session, the Aud looks as though it may remain underpinned, with support levels again  seen in place at the 200 DMA/100 DMA (0.7550/20), ahead of 0.7500. Below there would allow a run back to 0.7470, albeit probably not today.

On the topside, resistance will be seen at the session high of 0.7595, ahead of 0.7610, but above which would allow a run towards 0.7640/50.  I think we should be looking for a range-trade today, something like 0.7520/0.7595.

24 Hour:  Neutral Medium Term: Neutral
                                         Resistance                                         Support
0.7665 Minor 0.7550 200 DMA Pivot
0.7642 (61.8% of 0.7750) /0.7472 0.7533 Session low/200 HMA
0.7625 Minor 0.7520 100 DMA
0.7610 17 Apr high 0.7500 Minor
0.7595 Session high 0.7473 10 April low

Economic data highlights will include:

WBC Consumer Confidence, New Motor Vehicle Sales

NZDUSD: 0.7039

The Kiwi has held above 0.7000 on Tuesday, finishing near the highs of 0.7041, partly underpinned by the result of the Global Dairy Trade Index (GDT PI +3.1%, WMP +3.5%).

The daily indicators still look mildly positive, and thus we might expect to see the price remain underpinned again today although the hourly indicators are showing a degree of bearish divergence and it maybe that we are in for another choppy session, again using 0.7000 as a pivot. The topside will find resistance at 0.7050 and 0.7065, which may possibly cap it for the coming session, but above which may nudge 0.7090/0.7100. On the downside, 0.7000 should again provide strong support, but back below there would see bids at the previous day’s lows of 0.6987. Under there, we could head back to 0.6970, below which would find little support until 0.6915/20, although this seems unlikely to be bothered for a while. A neutral stance seems best right now, again using 0.7000 as a pivot. 0.6990/0.7050 could well cover it. NZ CPI coming up.

24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7100 Minor 0.6998 Session low
0.7089 21 Mar high 0.6987 17 Apr low
0.7065 (50% pivot of 0.7248/0.6889) 0.6975 100 HMA
0.7048 28 Mar high 0.6945 Minor
0.7039 Session high 0.6915 Weekly Cloud Base

Economic data highlights will include: