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

By | November 20, 2017

 

EURUSD: 1.1797
Preferred Strategy:  EurUsd had a range of 1.1764/1820 on Friday, ending in the middle, and looking to maintain a fairly neutral stance on Monday. With a fairly limited calendar this week it looks as though it will be politics and risk sentiment that will guide the action, although the FOMC Minutes may provide something directional on Wednesday.

At the start of the week, the short term momentum indicators look a little heavy and we might see another test of Friday’s lows, below which could allow a decline towards support at 1.1740/45, which should be strong support and I doubt we get there today. If wrong, below here would open the way back to 1.1700, below which 1.1670 would attract.

On the other hand, the daily charts still suggest that further gains are possible in the days ahead, and back above 1.1820/30 would find good sellers at 1.1855/60 and again at 1.1880/85, beyond which would allow a run towards 1.1900+.

For Monday, I prefer to adopt a neutral stance in the absence of any major data, but would possibly look to sell into strength above 1.1820/30, with a SL placed above 1.1885.

Sell EurUsd @ 1.1830. SL @ 1.1885, TP @ 1.1740.

24 Hour: Neutral -Mildly Bearish Medium Term: Neutral – Prefer to sell rallies
FX Charts Position: Short  – SL  above 1.1880
Resistance Support
1.1900 Minor 1.1756 16 Nov low
1.1880/86 12 Oct high /(61.8% of 1.2091/1.1553) 1.1740/35 (38.2% of 1.1553/1.1859)/100 DMA
1.1857/59 20 Oct high/16 Nov high 1.1700 Minor
1.1828 Daily cloud base 1.1671 (61.8% of 1.1553/1.1859)
1.1821 Friday high 1.1660 14 Nov low

Economic data highlights will include:

M:  German PPI, BuBa Monthly Report, Mario Draghi Speech

T: EU Financial Stability Report, Chicago Fed National Activity Index, US Existing Home Sales  , API Weekly Crude Oil Stock Inventory, Janet Yellen Speech

W: ECB Non-MP Minutes, US Jobless Claims, Durable Goods Orders, EIA Crude Oil Stocks Weekly Change, Michigan Consumer Sentiment Index, FOMC Minutes

T: US Thanksgiving Day, German Q3 GDP, EU Flash Manufacturing/Services/Composite PMIs, ECB Minutes

F: German IFO Business Climate/Expectations, US Flash Manufacturing/Services/Composite PMIs, Baker Hughes Oil Rig Count



USDJPY: 112.11
Preferred Strategy:  US$Jpy fell hard on Friday, with a large amount of Yen shorts being flushed out against both the US$ and on the crosses, with the NZD, AUD & CAD leading the way lower.

The daily momentum indicators are pointing increasingly lower now and we could see a further cleanout although we are approaching some decent support in the 111.50/70 area where it might be worth trying buy some dollars. Before then, 111.90/112.00 should provide some decent support.

On the topside, resistance on Monday will be seen at 112.35 and then at 112.60, ahead of 113.00 although this seems unlikely to be bothered today. Keep a close eye on the US treasury market as a break/close below the 200 DMA at 3.305% would suggest further downside for US$Jpy.

In the longer term I still prefer to look to buy the dollar but prefer to wait until we see 111.50. I think we will get there so trading from the short side currently seems to be the plan.

Sell US$Jpy @ 112.60. SL @ 113.10, TP @ 111.60

24 Hour: Prefer to sell rallies Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
113.49 15 Nov high 111.94/89 Friday low / (38.2% of 107.31/114.73)/200 WMA
113.14 Friday high 111.75 200 DMA/100 DMA
113.00 (38.2% of 114.73/111.94) 111.65 16 Oct low
112.60 (23.6% of 114.73/111.94) 111.46 25 Sept low/Daily cloud top
112.35 Minor 111.00 (50% of 107.31/114.73)

Economic data highlights will include:

M:  Merchandise Trade Balance

T:  All Industry Activity Index

W:

T:

F:



GBPUSD: 1.3215
Preferred Strategy: Sterling is back above 1.3200 on Friday, after a choppy session which saw a high of 1.3259 followed by a quick drop to the 1.3170 low, ahead of another recovery on hopes of a breakthrough on the Brexit negotiations, although the EU are putting pressure on UK PM May to come up with a more clearly defined plan before the EU Summit on Dec 14-15.

Overall, the momentum indicators are still in neutral so a cautious stance is required and it is wise to stand aside (although I remain long GbpAud). On balance, I still think Cable could grind higher in the days ahead although any negative Brexit headlines will see a rapid move to the downside, but for Monday, further choppy trade near current levels would not really surprise.

On the topside, resistance will again be seen at 1.3260, above which 1.3275/1.3300 would find good offers although I doubt we see it up here today.

On the downside, support will be now seen at 1.3170, 1.3150 and at 1.3135 ahead of the rising trend support low at 1.3100. I remain neutral, possibly very cautiously bullish. Note that the Autumn Budget Statement takes place on Wednesday.

24 Hour: Neutral  -Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat (Long GbpAud)
Resistance Support
1.3320 1 Nov high 1.3180 Minor
1.3300 Minor 1.3169 Friday low
1.3275 2 Nov high 1.3150 200 HMA
1.3255/59 (76.4% of 1.3320/1.3042)/Friday high /Daily cloud top 1.3134 16 Nov low
1.3230 Minor 1.3090 Rising trend support

Economic data highlights will include:      

M:

T: Public Sector Net Borrowing Requirements, Inflation Report Hearing, CBI Distributive Trade Survey – Orders

W: Autumn Budget Statement.

T: UK Q3 GD, Preliminary Total Business Investment (Q3)

F:



USDCHF: 0.9884
Preferred Strategy: US$Chf had a steady grind lower on Friday, and from the look of the 4 hour/daily momentum indicators we could see further losses on Monday although we are running into decent support below Friday’s low.

The 4 hour and daily momentum indicators are still hinting at the chance of further downside momentum, which if correct would head back below 0.9875 to where further support would been at 0.9845 and 0.9800/10.

On the topside, resistance will be seen at the 0.9900 pivot, ahead of Friday’s high at 0.9940, beyond which could see a move back to parity although not today as it looks as though the downside is currently the path of least resistance.

Further out, given the positive look of the weeklies, if we can eventually take out 1.0015/25 we could then head on to take another look at 1.0035/40, above which there is little to hold the dollar up ahead of 1.0100, and beyond that to 1.1025 and 1.0170.

24 Hour: Mildly Bearish  – Prefer to sell rallies Medium Term: Prefer to buy dips
FX Charts Position: Long – SL @ 0.9840.
Resistance Support
1.0037 27 Oct high 0.9879/78 16 Nov low / Friday low
1.0017 9 Nov high 0.9845 15 Nov low/100 WMA
0.9986 13 Nov high 0.9810 200 DMA
0.9940 16 Nov high /Friday high 0.9800 (38.2% of 0.9420/1.0037)
0.9900 Pivot 0.9785 Minor

Economic data highlights will include:

M:

T: Trade Balance

W:

T:

F:



AUDUSD: 0.7567
Preferred Strategy: AudUsd had another tough session on Friday in falling to a low of 0.7535 ahead of a late bounce, with much of the downside momentum being driven by AudJpy, which fell to a new 5 month low of 84.63.

As before, the downside seems to be the path of least resistance and the immediate support is now at the 0.7535 low, which will continue to be strong but below which would target Fibo support at around 0.7515 a break of which would then look towards 0.7485 and 0.7460/70 (Rising trend support). As I said before, I suspect the Aud$ is unfolding a bear flag formation and is likely to see continued downside pressure which will eventually take us towards 0.7400. Patience will be required but trading from the short side is still preferred.

On the topside, resistance will be seen at 0.7580/85, at 0.7600/10, at 0.7620 and at 0.7650. I doubt we go close to the top end of this, but if wrong, above here could then revisit the 13 Nov high of 0.7665, above which would then allow room to move towards 0.7675/80 and possibly 0.7695/0.7700.

In the absence of any data, a quiet day might be expected and the outlook remains unchanged. Speeches by RBA’s Kearns & Kohler as well as the RBA’s Nov minutes will be early-week risks.

Sell AudUsd @ 0.7580. SL @ 0.7615, TP @ 0.7500

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Neutral –Mildly Bearish
FX Charts Position:    Short
Resistance Support
0.7665 13 Nov high /200 HMA 0.7550 Minor
0.7649 14 Nov high 0.7535 Friday low /100 WMA
0.7625 Minor 0.7520 (76.4% of 0.7328/0.8124)
0.7609 16 Nov high 0.7500 Minor
0.7585 Minor 0.7485 Weekly cloud top

Economic data highlights will include:                                                                         

M:

T:  RBA Minutes, RBA Governor, Lowe Speech

W: WBC Leading Economic Index, Construction Work Done

T:

F:



NZDUSD: 0.6812
Preferred Strategy: The Kiwi made a new 18 month low on Friday, with the prospect of more to come in the days/week’s ahead given the lack of support to hold it up.

On the downside, the initial support now lies at 0.6800, below which would then find that there is little support ahead of 0.6670 although this remains a long way off and before then we are likely to see bids at 0.6750/60 and again at 0.6700/10.

On the topside, the initial resistance will be seen at 0.6835/40 and at 0.6880 ahead of 0.6900 and then at 0.6920 and 0.6935. The hourly charts are attempting to point a little higher so a small upside squeeze would not really surprise although I still prefer to sell into strength.

Overall, with the longer term (weekly) charts looking heavy, I suspect the Kiwi is currently biding its time ahead of a more sustained test of 0.6700 and lower – possibly much lower.

Sell NzdUsd @ 0.6840. SL @ 0.6890, TP @ 0.6770

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position: Flat
Resistance Support
0.6910 Descending trend resistance 0.6779 Friday low
0.6882 Friday high /(23.6% of 0.7198/0.6800) 0.6770 Minor
0.6885 Minor 0.6750 Minor
0.6850 Minor 0.6725 Minor
0.6835 Minor 0.6700 Minor

Economic data highlights will include:

M:  Food Price Index

T:  Global Dairy Trade Index

W:  NZ Visitor Arrivals

T:  Retail Sales

F: Trade Balance



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