2 Aug: Forecast: FX: US$/Majors

By | August 2, 2017


EURUSD: 1.1806
24 Hour: Neutral Medium Term: Mildly Bullish
EurUsd had a choppy session either side of 1.1800, but unable to continue its recent uptrend and leaving the outlook largely unchanged. It could well be that we now chop around near current levels until the NFP on Friday. The ADP is the major data risk today, while the Fed’s Mester & Williams will be speaking.

Technically, above the trend high of 1.1844, there is little to stop the Euro heading on towards 1.1975/1.2000, with very little resistance to stand in the way ahead of those levels. The next Fibo level is not actually seen until 1.2165 (50% of 1.3993/1.0340). While the daily momentum indicators are overbought, hinting at a possible correction, the weekly and monthly charts are both heading firmly higher.

On the downside, near term support arrives at the session low, and the 200 WMA, at 1.1785. Below there, we could head back to the 31 July low of 1.1722 and eventually to 28 July’s low of 1.1670, although a little unlikely at this stage.

Preferred Strategy: Neutral

Resistance Support
1.1996 Dec 14 low/55 MMA. 1.1785 200 WMA /Session low
1.1976 Jan 2015 high 1.1750 Minor
1.1900 Minor 1.1722 31 July low
1.1870 Minor 1.1700 Minor
1.1844 31 July high 1.1670 28 July low

Economic data highlights will include:

ECB Non-Mfg Meeting, EU PPI, US ADP Jobs data, ISM NY Index, EIA Crude Oil Stocks Weekly Change

USDJPY: 110.35
24 Hour: Neutral Medium Term: Neutral
The option barriers at 110.00 were finally triggered after the underwhelming US data but there was little follow-through and the dollar only fell to a 109.92 low, ahead of a bounce back to current levels.

The short term indicators suggest are now mixed; possibly slightly more positive so we could be in for a minor squeeze to the topside although it looks like being a tight session until the US ADP is released.

If wrong, then back below the session low would allow a run to 109.80 and possibly to 109.65. Below there though could eventually see a run towards 109.25 and even to 108.80 (Weekly Cloud Base).

On the topside, minor resistance will be seen at the session high at 110.58 and then at 110.75, a break of which would open up 111.00 and 28 July high of 111.32 although this seems unlikely to be seen today. If wrong, look for a run up towards 111.55 and then to 111.70 ahead of 111.90 (100 WMA) which should be strong resistance, if we get there.

Preferred Strategy: Neutral, although until we close above 111.20, the downtrend remains intact.

Resistance Support
111.55 100 DMA /200 HMA 110.15 (76.4% of 108.80/114.50)
111.32 28 July high 109.91 Session low
111.00 (23.6% of 114.50/109.92) 109.80 Minor
110.76 31 July high 109.65 (76.4% of 108.12/114.50)
110.58 Session high 109.40 Minor

Economic data highlights will include:

Japan Consumer Confidence

GBPUSD: 1.3209
24 Hour: Prefer to buy dips Medium Term: Turning Mildly Bullish
Cable climbed to an 11 month high of 1.3244 after the UK July Mfg PMI beat expectations and remains above 1.3200 heading into the NY close. Ahead of Thursday’s ECB Meeting we may chop around near current levels. No change to policy is generally expected despite some calls for a hike, and the MPC vote is expected to be 6-2 in favour of keeping rates on hold.

The short-term momentum indicators as mixed on Wednesday, but above the session high there is little to stop Cable heading to 1.3280. Above here 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.

On the downside, back below 1.3190/1.3200, minor support now lies at 1.3160 and 1.3120 ahead of 1.3100. Below there would open the way back to 1.3050/60 which underpinned Cable on 28 July. Below there, unlikely for a while I suspect, would return to 1.3020 ahead of 1.3000.

Preferred Strategy: Look to buy at around 1.3150 for a run towards 1.3280. SL @ 1.3080.

Resistance Support
1.3400 Minor 1.3190 Session low
1.3340 13 Sept ‘16 high 1.3160 Minor
1.3300 Minor 1.3120 Minor
1.3278 15 Sept ‘16 high 1.3096 Minor
1.3244 Session high 1.3060 28 July low/ (23.6% of 1.2588/1.3203)

USDCHF: 0.9652
24 Hour: Neutral Medium Term: Mildly Bullish
The dollar is a little lower as the Chf recovers from its recent selloff although it has been a fairly tight session (0.9630/82).

The short term momentum indicators are mixed/flat and a similar outcome may be in store on Wednesday. On the downside, minor support lies at the session low, at 0.9630, ahead of the 100 MMA (0.9600) which should be decent support. Below that could then revisit what may be the neckline of a reverse H/S formation at 0.9585 (objective: 0.9745), and back below there would head back to the 200 WMA at 0.9555 and then towards 0.9500

The dailies look positive though, and if 0.9700 and then 0.9720/30 can be overcome we could see a quick run higher, to where 0.9765 and 0.9805 will provide minor resistance ahead of the 100 WMA at 0.9870.

Preferred Strategy:  Prefer to buy dips at 0.9600, looking for a topside break of 0.9730. SL sub 0.9555.

Resistance Support
0.9807 30 May high/100 DMA 0.9630 Session low
0.9765 (50% pivot of 1.0100/0.9437) 0.9600 100 MMA
0.9726 28 July high 0.9585 Neckline
0.9712 31 July high 0.9555 200 WMA
0.9682 Session high 0.9500 Minor

AUDUSD: 0.7969
24 Hour: Prefer to sell rallies Medium Term: Neutral – Possibly look to buy dips.
The Aud headed up to 0.8041 prior to the RBA announcement and then fell back to 0.8000, and after some choppy trade through Europe and the US it remains heavy, near session lows but not too far removed from the 100 MMA at 0.7975.

This, and the 200 WMA, may continue to act as a magnate, but on the downside, minor support would arrive at the 31 July low of 0.7955 ahead of 28 July low of 0.7936. Below here, unlikely today, could then see a run towards 0.7890/00 ahead of the strong area at 0.7875.

On the other hand, the longer term charts still hint that buying dips remains the medium term plan and if we head back above 0.8000/20, we could then see a return to Tuesday’s high of 0.8041 and then to the trend high of 0.8065. Above 0.8065, there is little to stop the Aud from heading to 0.8160, albeit probably not today.

Preferred Strategy: The dailies are looking increasingly toppish, so selling rallies with a SL above yesterday’s high could be a plan. The June building approvals is coming up.

Resistance Support
0.8162 May 2015 high 0.7960 Session low
0.8065 26 July high 0.7955 31 July low
0.8042 Session high 0.7936 28 July low
0.8000 200 WMA 0.7890 (23.6% of 0.7328/0.8065)
0.7975 200 MMA 0.7874 21 July low /26 July low

Economic data highlights will include:                       

Building Permits

NZDUSD: 0.7472
24 Hour: Neutral Medium Term: Neutral -Prefer to buy dips
The Kiwi is lower on Wednesday, towards session lows following a range of 0.7461/0.7524. Much of the session was spent near the 0.7500 pivot, with the Kiwi not too far away from here following the release of the Global Dairy Trade Index. The GDT PI fell by -1.6% but the WMP +1.3%.

The short term momentum indicators are mixed and a cautious stance is needed for Wednesday although the 4 hour charts do point lower, and a break of 0.7460 could then see a move towards 0.7430, which should be strong support (200 WMA), but below which could see a return to 0.7400

On the topside, the dailies still look positive although they are becoming somewhat overbought, but the weekly charts also still suggest that further medium term gains look likely and back above 0.7500, and the session high of  0.7525, could then revisit 0.7545 (strong: 100 MMA/55 MMA) and the 27 July high (0.7557). Beyond this, there is little resistance to stop the Kiwi from heading on towards 0.7575 and above that there is nothing to stop it heading to 0.7740/45 (April 2015 high).

Preferred Strategy: Neutral – the 4 hour charts suggest selling rallies, with a SL placed above 0.7500, on Wednesday. Unemployment coming up.

Resistance Support
0.7575 May 2015 high 0.7460 Session low/28 July low
0.7557 27 July high 0.7425 200 WMA
0.7545 100 MMA/55 MMA 0.7400 Minor
0.7525/24 28 July high /Session high 0.7383 (23.6% of 0.6817/0.7557)
0.7500 Pivot 0.7350 Minor

Economic data highlights will include: