2 May: Forecast: FX: US$/Majors + trade ideas

By | May 2, 2018


EURUSD: 1.1992
The dollar is rampant and made further gains on Tuesday, taking out several important levels of support with the Euro under pressure from heavy selling in Sterling after the poor UK data. With the dollar increasingly picking up steam, further losses for the Euro seem likely although it will be today’s FOMC Statement that provides the direction. No change to rates is likely this month but a hawkish Statement seems likely.
1 hour/4 hour indicators: Mixed. Daily Indicators: Down Weekly Indicators:  Turning lower.
Preferred Strategy:  The short term momentum indicators look a little oversold today and some consolidation near the 200 DMA may be in order but the dailies look very heavy and the Euro does seem to have further losses ahead. If so, look for bids at 1.1980, the session low, below which could see an acceleration to 1.1910/35 and even to long term rising trend support, currently at 1.1890.

On the topside, resistance will be seen at 1.2010 and at minor levels at 1.2040/55, ahead of the session high of 1.2083, which seems unlikely to be bothered today. If wrong, look for offers at 1.2095/00 ahead of the chance of further gains to Monday’s high at 1.2138.

Sell EurUsd @ 1.2050. SL @ 1.2105, TP @ 1.1935

Resistance Support
1.2095 (23.6% of 1.2475/1.980) 1.1980 Session low
1.2083 Session high 1.1955 Minor
1.2055 Minor 1.1935 (61.8% of 1.1553/1.2555)
1.2040 Minor 1.1910 (76.4% of 1.1715/1.2555)
1.2010 200 DMA 1.1890 Rising trend support

Economic data highlights will include:

ECB Non-MP Meeting, EU Mfg PMIs, EU Q1 Provisional GDP, US ISM NY Index- Business Conditions, ADP Private Jobs data, FOMC Meeting – Interest Rate Decision

USDJPY: 109.84
US$Jpy has ground higher, to reach 109.88,  on the back of the dollar strength seen in the other major pairs, taking out the important 109.45/65 level in the process, and now seemingly has 110.00+ in its sights.
1 hour/4 hour indicators: Mixed. Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  US$Jpy seems likely to trade a narrow range ahead of the FOMC Meeting later in the day, but as before,  with the longer term charts looking positive, a test of 110.00 seems to be on the cards. If so, look for a test of 110.25, which should be strong, ahead of 110.50 and 110.85. Note that the reverse SHS formation, with the neckline at 107.85, suggests a target at somewhere near 110.70.

The short term charts look a little mixed, possibly allowing for a dip, and on the downside, buyers will be seen today at 109.45/50, which previously acted as a cap, which should be reasonable support, below which could see a run back to the session low of 109.22, and then to 109.00. Trading from the long side is again preferred; today looking for dips towards 109.45/50, with a SL placed under 109.00

Buy US$Jpy @ 109.50. SL @ 108.95, TP @ 110.65

Resistance Support
110.85 (76.4% of 114.73/104.60) 109.65 Minor
110.47 2 Feb high 109.45 100 WMA
110.25 200 DMA /(61.8% of 114.73/104.60) 109.22 Session low
110.00 Minor 109.00/108.96 100 DMA /27 Apr low /30 Apr low
109.88 Session high 108.78 25 Apr low

Japan Services PMI

GBPUSD: 1.3613
Cable once again remained under heavy pressure on Tuesday after the UK Mfg PMI fell to a 17 year low, but it did manage to recover from its new trend low of 1.3588 to finish the day at 1.3615. The daily/weekly charts suggest further trouble ahead, with today’s Construction PMI being the next cab off the rank, ahead of the FOMC Meeting, later in the session.
1 hour/4 hour indicators: Mixed. Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   While the short term momentum indicators now look a little oversold – and potentially turning a bit higher -, the long term charts look increasingly heavy and a test of the 200 DMA at 1.3520 would not surprise in the days ahead. A break of 1.3500 would find minor bids under here although there really is not too much to prop it up ahead of the January low at 1.3457.

On the topside, if Cable does manage a minor squeeze, near term resistance will be seen at 1.3640/50 and then at 1.3675 ahead of the previous long term trend support, currently at 1.3710, although that seems some way off, but further offers should arrive at the Fibo level at 1.3770 area. Once again, selling near term rallies seems to be the plan.

Resistance Support
1.3770 (23.6% of 1.4376/1.3587) 1.3600 Minor
1.3730 Minor 1.3587 Session low
1.3710 Minor 1.3550 Minor
1.3675 Minor 1.3520 200 DMA
1.3650 Minor 1.3457 11 Jan low

Economic data highlights will include:                                                                                        

UK Construction PMI

USDCHF: 0.9964
US$Chf, followed the dollar higher on Tuesday, reaching a high of 0.9968, closing nearby and looking as though parity is just a matter of time, but dependent on a hawkish Fed outlook.
1 hour/4 hour indicators: Mixed. Daily Indicators: Up Weekly Indicators:   Up
Preferred Strategy:  While the medium term indicators still look positive for further gains in US$Chf there is no change to the view of trading from the long side. If so, above back beyond the session high of 0.9968 will find offers in the 0.9975/1.0000 area, beyond which would open the way to 1.0037 and then to 1.0065/70. Further out we are potentially looking at a run up to 1.0170 and even to the December 2016 high of 1.0343 albeit probably not for a while to come.

On the downside, support will be seen at minor levels 0.9950/35/15 ahead of the session low of 0.9890. This looks unlikely right now but if wrong, on a break of 0.9890, further bids should arrive at 0.9870 and at 0.9845/50.

Buy US$Chf @ 0.9935. SL @ 0.9885, TP @ 0.1.0035.

Resistance Support
1.0067 (76.4% of 1.0343/0.9187) 0.9950 Minor
1.0037 27 Oct 2017 high 0.9935 Minor
1.0000 Psychological 0.9915 Minor
0.9977 8 Dec high 0.9890 Session low
0.9968 Session high 0.9871 27 Apr low /30 Apr low

Economic data highlights will include:                                                                                        

Swiss Consumer Climate

AUDUSD: 0.7489
The RBA gave no help to the Aud$ whish has declined to a new 11 month low and looking as though further losses lie ahead.
1 hour/4 hour indicators: Mixed. Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators are heavy although potentially showing some mild bullish divergence so some caution is warranted but the longer term momentum indicators point decisively lower so trading from the short side is still the way to go.

If we do see a near term squeeze higher, minor resistance will be seen at 0.7500 and then again at 0.7520, ahead of 0.7545/50 and then at 0.7575, although this looks rather doubtful to be seen again today selling rallies is preferred.

The longer term charts remains heavy and would seem to have further losses to come in the days ahead and a break of 0.7470 would then head towards minor support levels taking us down to 0.7400 although there really is not too much to hold it up ahead of the 1 June 2017 low at 0.7371.

Sell AudUsd @ 0.7500. SL @ 0.7555, TP @ 0.7380

Resistance Support
0.7575 (23.6% of 0.7915/0.7472) 0.7472 Session low
0.7545/50 Session high/(23.6% of 0.7813/0.7472) 0.7450 Minor
0.7535 Minor 0.7425 Minor
0.7520 Minor 0.7400 Minor
0.7500 Minor 0.7385 (76.4% of 0.7160/0.8135)

Economic data highlights will include:

TD Inflation, Caixin China Manufacturing PMI

NZDUSD: 0.7006
 The Kiwi had another tough day in trading at 2018 lows of 0.6990, dragged down by the heavy Aud$ following the RBA Meeting.
1 hour/4 hour indicators: Mixed. Daily Indicators:  Down Weekly Indicators:  Turning lower
Preferred Strategy:   The Kiwi is currently back above 0.7000 and the short term momentum indicators do seem to be attempting to put in a near term base, where sellers would be found on a bounce to 0.7020/35. Beyond here allows for 0.7060 and 0.7085, but probably not today unless the Fed turns dovish – doubtful.

On the downside, support will be still seen at 0.6990, below which would open the way to the December low at 0.6953. Under here, there is not much to hold the Kiwi up ahead of 0.6935 (76.4% of 0.6780/0.7438) and then 0.6910, long term rising trend support, which is where I think we are eventually heading break of 0.6900 would open up a move to 0.6815 and then to 0.6780

Sell NzdUsd @ 0.7035. SL @ 0.7090, TP @ 0.6955

Resistance Support
0.7094 27 Apr high 0.6990 Session low
0.7085 (23.6% of 0.7395/0.6990) 0.6975 Minor
0.7060 Minor 0.6953 20 Dec low
0.7035 Minor 0.6935 (76.4% of 0.6780/0.7438)
0.7020 Minor 0.6910 Rising trend support

Economic data highlights will include: