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

By | November 2, 2017


EURUSD: 1.1616
Preferred Strategy:  EurUsd is pretty much unchanged today after the Fed left rates unchanged, which means the technical picture is similar to yesterday, with traders now looking towards tomorrow’s NFP outcome.

As before, ideally the Euro should hold below1.1670, this being the 100 DMA and the neckline of the head/shoulder formation, but a topside break would trigger stops and could see a run back to 1.1700+. The 4 hour charts still suggest that this is a possibility so I would be cautious but overall as long as we don’t see a daily close above 1.1700, I prefer to trade from the short side. In the longer term, with the head shoulder trade now fully in play, the target is at around 1.1250, and with the longer term momentum indicators pointing lower I still think we will head in this direction, and to add to the position into any near term strength. Back below 1.1600 will find strong support at 1.1575 and then again at 1.1510.

Sell EurUsd @ 1.1670 & @ 1.1700. SL @ 1.1730, TP @ 1.1500.

24 Hour: Prefer to sell rallies Medium Term: Bearish
FX Charts Position: Short  – Looking  to add to the position into strength
Resistance Support
1.1745 200 HMA 1.1605 Session low
1.1725 (50% of 1.1879/1.1574) 1.1593 30 Oct low
1.1690 (38.2% of 1.1879/1.1574) 1.1574 27 Oct low
1.1670 100 DMA/H.S. Neckline 1.1550 Minor
1.1660 31 Oct high 1.1510 Rising trend support/(38.2% of 1.0570/1.2091)

Economic data highlights will include:

T: German Unemployment, EU Manufacturing PMI, US Jobless Claims, ISM NY Business Conditions, Fed Speakers: Powell, Dudley, Bostic

USDJPY: 114.14
Preferred Strategy:  US$Jpy has broken above 114.00, reaching a high of 114.27, but option expiries have limited further positive momentum.

Technically, the short term momentum indicators still look mixed/flat, so a fairly nimble stance is required although the 4 hour charts are beginning to look a little more positive. If so, on the topside, back above the session high would open the way to 114.45/50, an increasingly strong hurdle to overcome, but above which could see a test of the descending trend resistance, now at around 114.90. A break of 115.00 would then see little resistance until 115.20 and then 115.50.

On the downside, support will be seen at 113.75 and at the session low at 113.60, below which could then head back to the 31 Oct low (112.95) although this seems unlikely today. If wrong, a sustained break of 113.00 would see us back in the previous 112/113 range, where 112.75 would be the first level of support ahead of 112.30.

I remain fairly neutral, with option expiries likely to hamper progress in either direction, but if Powell is announced as the next Fed Chair, the $ could see a bit of a dip, but possibly then worth buying it.

24 Hour: Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
115.50 13 March high 113.95 Minor
115.19 14 March high 113.70 200 HMA
114.90 Descending trend resistance 113.59 Session low
114.49 11 July high/27 Oct low 113.40 Minor
114.27 Session high 112.95 31 Oct low

GBPUSD: 1.3244
Preferred Strategy: Cable reached 1.3321 in early UK trade after the solid Mfg PMI reading, but then faded as traders squared up ahead of the BOE rate decision, due later today. A hike is pretty much a done deal but the interest will be in the statement, and depending on a hawkish/dovish outcome, will give Cable its next direction.

A neutral stance is therefore required, but back above the 1.3320 could then see a squeeze towards 1.3335/40 – and above that there is little to stop Cable heading to 1.3400+.

On the downside, support will be seen at 1.3225, below which cold se a move back to 1.3160 and even towards 1.3000 if the statement is overly dovish. I am still long GbpAud and think there is plenty of upside ahead – looking for 1.82, although this will be very dependent on today’s BOE outcome.

24 Hour: Neutral – Mildly Bullish? Medium Term: Neutral
FX Charts Position: Flat (Long GbpAud)
Resistance Support
1.3415 (61.8% of 1.3656/1.3026) 1.3240 Session low
1.3375 Minor 1.3225 (38.2% of 1.3069/1.3320)
1.3337 13 Oct high/(50% pivot of 1.3656/1.3026) 1.3195 200 HMA/(50% of 1.3069/1.3320)
1.3320 Session high 1.3170 (61.8% of 1.3069/1.3320)
1.3270 100 WMA 1.3130 (76.4% of 1.3069/1.3320)

Economic data highlights will include:                                                                                                                                       

BOE Meeting/Statement/Minutes/Vote Count/APP Facility

USDCHF: 1.0032
Preferred Strategy: US$Chf has had a strong session in making gains after the FOMC and pre Trump’s Fed pick, the tax plan, due Thursday, and then the US jobs data Friday. Currently the dollar sits at session highs at around 1.0030.

With the momentum indicators generally looking positive, further dollar strength could be in store. If so, above 1.0040, there is little to hold the dollar up ahead of 1.0100, and beyond that to 1.1025 and 1.0170.

On the downside, support will be seen at 1.0000, at yesterday’s lows of 0.9967 and then at 0.9940,

For now, look for the dollar to chop around current levels, but with the view of buying dips for an eventual move towards 1.1000+.

Buy US$Chf @ 0.9940. SL @ 0.9990, TP @ 1.0070

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish  – Prefer to buy dips
FX Charts Position: Long
Resistance Support
1.0170 6 March high 1.0000 Psychological
1.0123 (76.4% of 1.0343/0.9420) 0.9967 Session low
1.0099 11 May high 0.9941 31 Oct low
1.0075 Minor 0.9920 Minor
1.0036/37 27 Oct high /Session high 0.9890 (23.6% of 0.9420/1.0037)

AUDUSD: 0.7672
Preferred Strategy: AudUsd was firmer in Europe and reached 0.7695 but eventually come under some mild downside pressure following the solid ADP number. It has since chopped around near 0.7680, unfazed by the FOMC statement.

The Building Permits and Trade Balance will give the guidance today but all up I would not be surprised to see further sideways trade.  On the topside, the neckline of the head/shoulder formation has again combined with the 100 DMA to halt any move above 0.7700. If this is broken, stops will be triggered and we could then see a move towards 0.7740, where I would again look to sell it.

If the Aud heads lower, decent support should arrive at 0.7750 and then again 0.7720/30.

Overall, trading from the short side remains favoured, looking for another run towards last Friday’s lows of 0.7625 and eventually towards 0.7570 although we should leave room to sell into the 0.7720/40 area. Sell AudUsd @ 0.7720. SL @ 0.0.7745, TP @ 0.7625

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position:    Short  – Looking  to add to the position into strength
Resistance Support
0.7740 (23.6% of 0.8102/0.7624) 0.7648 Session low
0.7715 Minor 0.7639 31 Oct low
0.7695/98 Session high/31 Oct high 0.7630 (61.8% of 0.7328/0.8124)
0.7690 200 DMA 0.7624 27 Oct low
0.7675 Minor 0.7571 7 July low

Economic data highlights will include:              

Trade Balance, Building Permits

NZDUSD: 0.6884
Preferred Strategy: The Kiwi bounced to as high as 0.6930 in the wake of yesterday’s solid jobs data although it is now back below 0.6900.

On the downside, a move back below the 0.6860 would find strong support at 0.6830 and again at 0.6817, where we have a double bottom with the May low. Below that though would then find that there is little support ahead of 0.6670 although I don’t think we head anywhere close for the time being. The short term momentum indicators look mildly positive, and back above 0.6900 could see another run to 0.6930. Beyond there would allow for a stronger move towards 0.6960 although this seems unlikely today

Sell NzdUsd @ 0.6925. SL @ 0.6940, TP @ 0.6830.

24 Hour: Mildly Bullish – Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position: Flat
Resistance Support
0.7000 Psychological 0.6832/30 30 Oct low /31 Oct low
0.6970 (38.2% of 0.7210/0.6817) 0.6817 11 May low/27 Oct low
0.6960 (23.6% of 0.7434/0.6817) 0.6800 Minor
0.6930 Session high 0.6760 Minor
0.6910 (23.6% of 0.7210/0.6817) 0.6720 Minor