2 May: Forecast: FX: US$/Majors

By | May 2, 2017


EURUSD: 1.0903

EurUsd has had an uninspiring inside day on Tuesday, leaving the outlook unchanged.

Technically, further choppy trade appears likely, but possibly with a slight upside bias, which should to continue to underpin the Euro in the next couple of days. The initial resistance will now be seen at around 1.2925 and then again at the recent trend high of 1.2947, while a break of 1.0950 would target the 100 WMA at 1.0990, and which should be strong resistance at the first attempt. A break of 1.1000 would then see little resistance until 1.1070 although that remains a long way off. On the downside, below the 1.2884 session low, support will be seen at 1.0850/60 and below there at 1.0820/30. Under here would suggest the chance of a top being in place and the possibility of filling in the chart gap, which could see the Euro head back towards 1.0730 although this increasingly distant.

Given that the dailies remain positive, buying dips today towards 1.0860 would seem to be the plan but keep stops on long positions tight, below 1.0820.

The Mfg PMIs are due today but traders seem likely to trade a fairly narrow range once again while waiting for tomorrow’s FOMC decision.

24 Hour: Range Trade Medium Term: Mildly bullish
                                          Resistance Support
1.1070 (76.4% of 1.1300/1.0340) 1.0861/51 (23.6% of 1.0570/1.0947)/26 Apr low
1.0990 100 WMA 1.0835 200 DMA
1.0947 28 Apr high 1.0820 24 Apr low
1.0930 (61.8% of 1.1300/1.0340) 1.0805 (38.2% of 1.0570/1.0947)
1.0923 Session high 1.0760 (50% of 1.0570/1.0947)

Economic data highlights will include:

German Unemployment, EU Mfg PMIs, EU Unemployment, API Weekly Crude Oil Stock Inventory

USDJPY: 111.85

US$Jpy has been underpinned by the improving risk sentiment seen on Monday although the upside for the dollar has been limited below 112.00, with progress halted by the soft US data.

The short term momentum indicators are giving us little hint as to the next direction although the dailies do remain positive. The initial support (minor) should arrive at 111.40/50 and then the session low at 111.20 ahead of more solid bids that are likely to arrive at around 111.00. Below 111.00, which seems a little unlikely today, could see a run towards 110.85, 110.50 and to 110.35, which should be strong support if/when we see it. On the topside, the initial resistance will be seen at 111.90/112.00, a break of which could see a quick run to 112.15. Above this there is little to stop the dollar heading on to 112.65 although I am not sure we get there today.

Given the neutral look of the short term momentum indicators, we could remain in a fairly tight range near current level while waiting on tomorrow’s FOMC meeting, although Kuroda is speaking today, and the BOJ Minutes could create some volatility. From the look of the daily indicators, longer term traders will be looking to buy any decent dips and with the dollar closing at the day’s high, a blip above 112.00 would not surprise.  Use 111.50/112.15 as a guide for Tuesday and note that Japan will be on holiday from Wednesday onward, and interest in the Yen will be rather diminished this week.

 24 Hour: Neutral Medium Term: Mildly bullish – Prefer to buy dips.
                                         Resistance Support
113.05 Descending trend resistance 111.60 Minor
112.66 (61.8% of 115.50/108.12) 111.20 Session low
112.40 Minor 111.06/02 28 Apr low /(23.6% of 108.12/111.92)
112.19/15 31 Mar high/(38.2% of 118.66/108.12) 110.86 26 Apr low
111.92 Session high 110.50 (38.2% of 108.12/111.92)

Economic data highlights will include:

BOJ Minutes, BOJ Kuroda Speech, Markit Services PMI

GBPUSD: 1.2887

Cable was unable to maintain the strength seen into Friday’s close and remained heavy for much of Monday in thin holiday trade, weighed down by Brexit complications and finishing near the day’s lows of 1.2884.

Technically, on the downside, the initial support will be seen at the 1.2880/85, below which could signal a return to 1.2840 and possibly to 1.2800/10, and with the short term momentum indicators looking mildly negative, some downside pressure would not surprise today..

On the topside, minor resistance will be seen at 1.2900, 1.2925 and at the session high of 1.2942. A break of the 28 Apr of high (1.2965), unlikely to happen today, could see a move to 1.3000, last seen in September, and possibly higher to 1.3035, and then further out to where the longer descending term trend resistance currently lies at around 1.3135.

While the daily momentum indicators remain positive, buying dips is preferred, looking for another test of the 1.2965 high and eventually 1.3000 and higher, although Cable needs to make a move fairly soon as the dailies may soon be on the point of rolling over to the downside.

 24 Hour: Neutral Medium Term:  Prefer to buy dips
                                         Resistance           Support
1.3035 (38.2% of 1.5018/1.1821) 1.2885 Session low
1.3000 Psychological 1.2845 200 HMA
1.2985 55 WMA 1.2830 Minor
1.2965 28 Apr high 1.2805 26 Apr low
1.2935 Minor 1.2760 (23.6% of 1.2108/1.2965)

USDCHF: 0.9959

US$Chf has had a rangebound session (0.9927/0.9964) leaving the outlook unchanged

While the short term momentum indicators remain neutral, the daily charts still look slightly heavy so a break of minor support at around 0.9920/30 could see a return to 28 Apr’s spike down to 0.9893 where we have a minor double bottom. Below there, further support lies at 0.9880, but a break of which could see a run towards 0.9830. On the topside, resistance will again be seen at 0.9970/75, ahead of a possible return to parity. A neutral stance is currently required.

 24 Hour: Range Trade Medium Term: Neutral – Mildly Bearish
                                         Resistance Support
1.0070 100 DMA 0.9927 Session low
1.0055 (76.4% of 1.0107/0.9893) 0.9893 28 Apr low
1.0025 (61.8% of 1.0107/0.9893) 0.9882 (76.4% of 0.9818/1.0104)
1.0000 (50% of 1.0107/0.9893) 0.9865 Minor
0.9968/74 26 Apr high /(38.2% of 1.0107/0.9893) 0.9830 28 Mar low

AUDUSD: 0.7527

The Aud had a solid session as risk assets came back into favour, rising from early lows of 0.7465 to a high of 0.7540 before settling the day at 0.7525, ahead of today’s RBA decision. No change to policy is expected and the focus is likely to be on the statement.

The daily momentum indicators still look neutral so a cautious stance is again required although the 4 hour indicators are still pointing higher, and on the topside the initial resistance will be seen at the session high (0.7540) and then again at 0.7545/50, which should be strong, if we get there. Above here could then see a return to the recent highs of 0.7587 and even to 0.7610 although this would require a rather hawkish RBA today, which seems highly unlikely.

On the downside, minor support will be seen around 0.7490/0.7500 and then again at 0.7465/70. Below here seems unlikely today but strong bids would arrive at 0.7440/50, if we get there. If wrong, below 0.7440 would then find only minor support until we reach 0.7385.

24 Hour: Neutral Medium Term: Neutral
                                         Resistance                                         Support
0.7610 17 Apr high 0.7510 200 HMA
0.7587 24 Apr high 0.7490 Minor
0.7571 25 Apr high 0.7467 Session low
0.7545/48 Descending trend resistance /200 DMA 0.7447/40 28 Apr low /28 Apr low
0.7539 Session high 0.7430 Minor

Economic data highlights will include:

AIG Services Index, Caixin China Mfg PMI, RBA Interest Rate Decision/Statement, Australian Budget

NZDUSD: 0.6908

As with the Aud, the Kiwi rode higher on Monday, reaching 0.6922, up from an early low of 0.6851.

As before, the shorter term momentum indicators suggest the chance a minor squeeze higher while at the same time the daily charts, which had been hinting at lower levels in the days ahead, do now seem to be flattening out so a neutral stance is probably best today. With the 4 hourlies hinting that we could head slightly higher, look for targets at 0.6925, 0.6950 and 0.6975 ahead of the chance of a retest of 0.7000, although this seems unlikely.

Below 0.6900 would find minor bids at around 0.6880 ahead of the chance of a return to 0.6845/50, although this also seems unlikely in the short term. If wrong, below this would then find minor bids at around 0.6825, but below that would then allow a move to 0.6800/05 and eventually lower. Look out for the RBA and for the Global Dairy Trade Index, tonight.

 24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7005 (76.4% of 0.7052/0.6847) 0.6880 Minor
0.7990 Minor 0.6851 Session low/28 Apr low
0.6973 (61.8% of 0.7052/0.6847) 0.6847 28 Apr low
0.6950 (50% of 0.7052/0.6847) 0.6825 Minor
0.6925/22 (38.2% of 0.7052/0.6847) /Session high 0.6803 (50% pivot of 0.6125/0.7485)

Economic data highlights will include:

Global Dairy Trade Index