2 July: Trend table outlook for FX, Commodities, Indices

By | July 2, 2019

Tuesday has seen an about turn in fortunes for the US$, which is stronger on all fronts and from the look of the DXY charts it may have further progress ahead. Today’s focus will be on the RBA, and it will be the Aud$ and related crosses that will have most impact on the FX markets. Elsewhere, US stocks still look very positive, the ASX less so although an RBA rate cut will probable result in a rally to higher levels. The metals look heavy, as does WTI in the short term.

EurUsd: The Euro took out the 1.1350, 200 DMA support on Monday and has not looked back in falling to a session low of 1.1280, pretty much where it currently sits after having closed the day below 1.1295 (38.2% of 1.0306/1.0411). The pair now looks heavy in the short term/daily charts, and once below 1.1280, the initial, strong support would arrive at 1.1260 (50% of 1.0306/1.0411/100 DMA). A break of this would then allow for a move towards 1.1223 (61.8%) and eventually to 1.1178 (76.4%). On the topside, minor resistance will be seen at 1.1300 and at 1.1315 ahead of the200 DMA at 1.1350.Above here looks unlikely but further gains could then see a run towards 1.1400 and the 25 June high of 1.1411, beyond which the next target is at 1.1447 (20 March high), which ties in with the Fibo level (23.6% of 1.2555/1.1106). For now, trading from the short side looks to be the plan, selling Euro rallies but as I said yesterday, with a Fed rate cut looming, the dollar is going to find it tricky to make any major headway higher.

DXY:  (96.83)  The DXY rallied by 0.75% on Monday and looks positive heading into Tuesday trade, suggesting that buying dips is the general theme. If so, look for a run to 97.00 and the 100 DMA at 97.08.  Beyond here would open the way to 97.20 (minor) and then to 97.97 (18 June high), but probably not today. Support arrives at 96.57 (100 DMA) ahead of 96.40 (minor) and 96.00 (200 WMA) and then at last week’s low of 95.84. Buying dips currently seems to be the plan, but without looking for too much upside momentum I suspect.

US$Jpy: Having gapped up from 107.90 to 108.23 in early Monday trade, this gap will require filling, after US$Jpy traded a tight 108.10/50 range throughout the session. The 4 hour and daily charts still look positive and we are currently near session highs although further gains may be slow as the pair is now trading back within the month-long, choppy, sideways price action that goes all the way up to 108.80. Nevertheless, the charts look constructive and the next Fibo level is seen at 108.90 (38.2% of 112.40/106.78), above which would open the way to 109.00 and higher, with minor resistance seen at 109.1, beyond which would open 109.50 (50% of 112.40/106.78), Minor support now lies 108.10 ahead of 107.90/108.00 and 107.60 (200/HMA) , 107.35 and at 107.00, below which buyers would be seen at 106.75/80 but if this ever gives way there are only minor support levels at 106.50 and106.20 ahead of the next Fibo level at 105.98 (76.4% of 104.00/112.40).  Given the positive look of the 4 hour charts and the possible basing formation in the dailies, trading the US$ from the long side seems favourable although I suspect that the upside from here will be slow. Buy dips.

AudUsd:  The Aud saw an early squeeze to 0.7033, pulling up in line with the 100 DMA before heading sharply into reverse and breaking various support levels to finish Monday at 0.7065, having reached the support at 0.6955 (38.2% of 0.6831/0.7033). This comes ahead of today’s RBA Meeting at which a rate cut is 70% priced in, and if this comes about we might see further weakness that takes us towards 0.6932 (50% pivot of 0.6831/0.7033), 0.6908 (61.8%) and to 0.6878 (76.4%). If the RBA sit on their hands, it would surprise the market and would result in a sharp rally back towards 0.7000, above which would open the way back to 0.7030/35. This looks unlikely and I prefer to be short given the look of the 4 hour charts.

NzdUsd: The Kiwi is now back below both the 100 DMA and the 200 DMA, and the short term momentum indicators look heavy although the daily charts still point higher, so further gains may lie ahead although if the RBA cut today, a weaker Aud$ could drag the Nzd down with it, with the RBNZ likely to follow suit at their next meeting. Having reached a high of 0.6725 on Monday, it has since fallen to the first Fibo support at 0.6665 (23.6% of 0.6486/0.6725), currently at 0.6671. Below the Fibo level opens the way to 0.6650 (minor) and then to 0.6635 (38.2%) and to 0.6600. On the topside, resistance will be seen at 0.6695 (100 DMA) and then at 0.6708 (200 DMA) ahead of 0.6725, which seems unlikely to be seen today.  I remain fairly neutral on the Kiwi against the US$ but selling AudNzd may be a plan.


*Trade of the day: July 2, 2019; 8:27 AM(AET)                        

*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.

All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.

Sell EurUsd @1.1310. SL @ 1.1355, TP @ 1.1210

Sell AudUsd @ 0.7000. SL @ 0.70450, TP @ 0.6900