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

By | November 21, 2017



EURUSD: 1.1730
EurUsd had a choppy range of 1.1721/1.1807 care of the German political standoff, leaving Angela Merkel with the possibility of facing new elections.

Focus will again be on Germany today, to see what the next direction will be, and that is likely to weigh on the downside although with the momentum indicators looking mixed it could be another session within the 1.1700/1.1800 range. As we said yesterday, with a fairly limited calendar this week, it looks as though it will be politics and risk sentiment that will continue to guide the action, although the FOMC Minutes may provide something directional on Wednesday.

The short term momentum indicators still look a little heavy and we might see another test of the 1.1721 low, below which could allow a decline towards 1.1700, below which 1.1670/80 would attract. This was the previous H/S neckline and is also the 61.8% Fibo level (1.1670) of the recent rally from 1.1553, and should see decent bids but below which opens the way to 1.1650 and eventually to 1.1625. Having closed back below the 100 DMA (1.1745), I suspect the downside will eventually come good, and today, selling at this level may be a plan.

On the other hand, the daily MACDs still suggest that further gains are possible in the days ahead, and back above the session high of 1.1807 would open up 1.1820/30, which would find good sellers ahead of 1.1855/60 and again at 1.1880/85, beyond which would allow a run towards 1.1900+.

Preferred Strategy:  For Tuesday, I prefer to adopt a fairly neutral stance in the absence of any major data but with one eye on headlines from Germany. Out of choice I would look to sell into strength above 1.1745, perhaps towards 1.1780, with a SL placed above 1.1830.

Sell EurUsd @ 1.1770. SL @ 1.1830, 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
1.1857/59 20 Oct high/16 Nov high 1.1735 100 DMA
1.1828 Daily cloud base 1.1721 Session low
1.1821 17 Nov high 1.1690 Minor
1.1807 Session high 1.1671 (61.8% of 1.1553/1.1859)
1.1745 100 DMA 1.1660 14 Nov low

Economic data highlights will include:

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

USDJPY: 112.63
US$Jpy had a more positive session on Tuesday as risk sentiment improved, holding on above decent support below 112.00 and slowly squeezing up to a high of 112.70

The short term momentum indicators are looking positive today and on the topside, resistance on Tuesday will be seen at 112.70, ahead of 113.00, a break of which could see the dollar head back towards  113.15 and possibly on to 113.30.

The daily momentum indicators are still pointing lower though and we could see another run to levels below 112.00, although decent support lies in the 111.50/70 area where it might be worth trying buy some dollars if we ever see it down there..

Preferred Strategy:  Support today will arrive at 112.20/112.00 and I doubt that we go under here today, and overall I suspect we may be in for a couple of days of 112/113 range trading.

In the longer term I still prefer to look to buy the dollar but prefer to wait until we see 112.00/111.50.

Buy US$Jpy @ 112.15. SL @ 112.40, TP @ 113.50

24 Hour: Neutral – Prefer to buy dips? Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
113.65 (61.8% of 114.73/111.87) 112.05 200 WMA
113.33 15 Nov high/(50% of 114.73/111.87) 111.87 Session low
113.14 17 Nov high/200 HMA 111.75 200 DMA/100 DMA
112.95 (38.2% of 114.73/111.87) 111.46 25 Sept low/Daily cloud top
112.70 Session high 111.00 (50% of 107.31/114.73)

Economic data highlights will include:                                      

All Industry Activity Index

GBPUSD: 1.3232
Sterling traded up to 1.3279 in Europe, assisted by reduced Brexit fears and the German political angst but has since given back a few of the gains and currently sits in the middle of the day’s range (1.3185/3279).

Overall, the momentum indicators are still in neutral gear, so a nimble stance is required, but on balance I still think Cable could grind higher in the days ahead. Any negative Brexit headlines could quickly alter that theory and would see a rapid move to the downside, but for Tuesday, 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 much above here today.

On the downside, support will be now seen at 1.3185, 1.3150 and at 1.3135 ahead of the rising trend support low at 1.3100.

Preferred Strategy:  I remain neutral, possibly very cautiously bullish (Long GbpAud), and as long as we don’t see a daily close below 1.3165, which would negate the series of higher highs/lows, I will stick with the mildly bullish tone.

24 Hour: Neutral  -Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat (Long GbpAud)
Resistance Support
1.3320 1 Nov high 1.3210 100 WMA
1.3300 Minor 1.3185 Session low
1.3279 Session high 1.3150 200 HMA
1.3260 Daily cloud top 1.3134 16 Nov low
1.3230 Minor 1.3090 Rising trend support

Economic data highlights will include:                                                                

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

USDCHF: 0.9934
US$Chf had a bid tone through European/US trade, and is closing near session highs of 0.9934.

The 4 hour and daily momentum indicators are now pointing a little higher and further upside momentum could be on the cards although I do not expect too much action unless the Euro starts to move on political headlines from Germany. If so, on the topside, resistance will be seen immediately ahead, at 0.9935/45, beyond which could see a move back to parity although probably not today

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.

On the downside, support will be seen today at 0.9900, below which could revert to the session low at 0.9878 although I don’t think we get there. If wrong look for a move back below 0.9875 to where further support would been at 0.9845 and 0.9800/10.

Preferred Strategy:  Buy US$Chf @ 0.9900. SL @ 0.9870, TP @ 1.0015

24 Hour: Mildly Bullish – Prefer to buy dips 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 / 17 Nov low/Session low /Rising trend support
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 /17 Nov high 0.9800 (38.2% of 0.9420/1.0037)
0.9933 Session high 0.9785 Minor

Economic data highlights will include:

Trade Balance

AUDUSD: 0.7546
AudUsd reached 0.7575 in Europe but then faded and is closing near the lows of 0.7543, leaving the outlook unchanged.

As before, the downside seems to be the path of least resistance and the immediate support is still at the 0.7535, November 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 the session high and again 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.I Preferred Strategy:  In the absence of any data, a quiet day might be expected and the outlook remains unchanged. A speech by the RBA Governor Philip Lowe (in early European time)and the RBA’s Nov minutes will be today’s focus.

Sell AudUsd @ 0.7570. SL @ 0.7610, TP @ 0.7475

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 0.7543 Session low
0.7649 14 Nov high 0.7535 17 Nov low /100 WMA
0.7625 Minor 0.7520 (76.4% of 0.7328/0.8124)
0.7609 16 Nov high 0.7500 Minor
0.7573 Session high 0.7485 Weekly cloud top

Economic data highlights will include:                                                                         

RBA Minutes

NZDUSD: 0.6806
The Kiwi has chopped around, mostly above 0.6800 on Monday, and currently sits in the middle of the 0.6793/0.6839 range.

The momentum indicators are mixed, so I am pretty neutral albeit looking to sell rallies for an eventual continuation of the downside.

The initial support now lies at 0.6790/6800, 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 again be seen at 0.6835/40, ahead of 0.6880 and 0.690. Above this would allow a move to 0.6920 and 0.6935, albeit not today. The 4 hourly charts may be attempting to point a little higher so a small upside squeeze would not really surprise although I still prefer to sell into strength.

Preferred Strategy:  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. GDTI tonight.

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 0.6793 Session low
0.6882 17 Nov high /(23.6% of 0.7198/0.6800) 0.6779 17 Nov low
0.6885 Minor 0.6750 Minor
0.6850 Minor 0.6725 Minor
0.6839 Session high 0.6700 Minor

Economic data highlights will include:

Global Dairy Trade Index