23 Jan: Forecast: FX: US$/Majors + trade ideas

By | January 23, 2018


US$ is mixed but remains under pressure after US Senate resolved Govt shutdown.

EUR underpinned, assisted by Spain upgrade from Fitch.

Cable at new highs after Macron hints on Brexit deal. EUR/GBP cracks below 200 DMA.

Central bank meetings ahead, with expectations for BOJ (today), ECB (Thur) to make a rhetorical shift in their outlook although no change to policy is expected form either

Stock markets head higher, S&P & DJI at new record.

EURUSD: 1.2259
EurUsd made some early minor gains but then gave up on the topside as news of the US senate deal became apparent and traders now seem to be on hold while waiting on Thursday’s ECB meeting. Note that the ECB’s Draghi & Coeure will participate in today’s Eurogroup meeting and the annual junket to Davos also starts today.
1 hour/4 hour indicators: Neutral Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  A neutral stance seems prudent on Tuesday, and with just the ZEW in focus on the calendar another day of 1.2200/1.2300 would not surprise, although the daily charts do look positive and a return to the trend high should not be discounted either. Buying dips is preferred.

Buy EurUsd @ 1.2185. SL @ 1.2280, TP @ 1.2135

Resistance Support
1.2335 Minor 1.2213 Session low
1.2322 17 Jan high 1.2165 17 Jan low
1.2295 19 Jan low 1.2140 23.6% of 1.1553/1.2295/200 HMA
1.2275 H/S Neckline 1.2120 Minor
1.2270 Session high 1.2100 Minor

Economic data highlights will include:

EcoFin Meeting, German/EU ZEW Economic Sentiment Survey, EU Preliminary Consumer Confidence (Jan), Richmond Fed Mfg Index, World Economic Forum- Davos

USDJPY: 110.95
US$Jpy  traded higher after finding support at 110.50, with some shots seen squaring up ahead of today’s BOJ meeting. The pair has traded up to 111.20, currently at 110.00. No change is expected to policy but Kuroda will attempt to sound positive that inflation will finally reach the BOJ target while at the same time keeping the QE program in place, attempting to weaken the Yen.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  A neutral stance is required ahead of the BOJ. The short term momentum indicators look constructive, although the medium term charts do hint that the dollar is going remain under some pressure in the day’s ahead. If so, there will be a fair bit of support near 110.00 so any downside momentum, if seen, should be fairly slow. Just looking at the 4 hour chart, it does seem as though a basing formation may be building. Buying EurJpy may be a plan.
Resistance Support
112.20 100 DMA 110.85 100 HMA
111.70 200 DMA 110.48 19 Jan low/Session low
111.47 18 Jan high 110.19 17 Jan low
111.21 Session high 110.00 Rising trend support
111.00 Pivot 109.90 100 WMA

Economic data highlights will include:                                      

BOJ Interest Rate Decision/Statement/Press Conference/Outlook

GBPUSD: 1.3983
Sterling has had another solid session, making new post-Brexit highs, just 10 points short of 1.4000, underpinned by some positive comments from France’s Macron, and looking as though it could take out the nearby resistance, for further gains ahead.
1 hour/4 hour indicators: Turning higher Daily Indicators: Up Weekly Indicators:  Up
Preferred Strategy:  Cable looks increasingly positive, and with the daily/weekly momentum indicators aligning higher, a test of 140.00/1.41 would not surprise. If we do break 1.4000, there is not much resistance ahead of 1.4130/50 and even that is only minor, with the next major Fibo level not seen until 1.4250 (76.4% of 1.5017/1.1821). The 4 hour charts show some bearish divergence so waiting to buy dips would seem the best laid plan.
Resistance Support
1.4130 Minor 1.3945 Minor
1.4100 Minor 1.3880 Minor
1.4050 Minor 1.3835 Minor
1.4000 Psychological 1.3800 Minor
1.3988 Session high 1.3775 Minor

Economic data highlights will include:

PSNBR (Dec), CBI Distributive Trade Survey – Orders (June)

USDCHF: 0.9621
US$Chf is unchanged today after a tight 45 point range.
1 hour/4 hour indicators: Turning higher? Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  As with yesterday, the daily charts look heavy but the 4 hour momentum indicators remain constructive on Tuesday, hinting that we could then see a retest of the 0.9650/65 area, above which could see a return towards 0.9700/20. On the downside, support will again be seen at 0.9590/0.9600 and again at 0.9570. I don’t think we see it here today but if wrong, look for a return to the strong support area at 0.9550 and then again at 0.9535, below which could open the way to 0.9500.
Resistance Support
0.9700 38.2% of 1.0004 /0.9535 0.9591 Session low
0.9665 18 Jan high 0.9570 17 Jan low
0.9650 17 Jan high 0.9550 100 MMA /Rising trend support
0.9637 (23.6% of 1.0004 /0.9535)/Session high 0.9535 19 Jan low
0.9625 Minor 0.9515 Minor

AUDUSD: 0.8014
 AudUsd is still trading at close to 0.8000, after climbing from the 0.7978 Asian low to a European/US high of 0.8026.
1 hour/4 hour indicators: Neutral Daily Indicators: Up – Becoming Overbought Weekly Indicators:  Neutral – Turning higher?
Preferred Strategy:  The longer term uptrend remains intact, although the daily charts warn of a correction, with the appearance of some bearish divergence in the 4 hour charts. It is a fairly light data calendar this week and a long w/e in Australia on Friday so external factors will drive price action. Right now a neutral stance seems best although I suspect that we may now be looking for areas to sell AudUsd, but with a tight stop loss in place. Note that the 200 MMA lies at 0.8055, which should be strong resistance.

Sell AudUsd @ 0.8035. SL @ 0.8065, TP @ 0.7950

Resistance Support
0.8102 20 Sept high 0.8000 Pivot
0.8080 Minor 0.7978 Session low
0.8055 200 MMA 0.7960 Minor
0.8036/38 21 Sept High/19 Jan high 0.7940 17 Jan low
0.8026 Session high 0.7900/10 23.6% of 0.7510/0.7998 / Rising trend support

NZDUSD: 0.7319
The Kiwi is trading higher after a lift above 0.7300 in early European trade, reaching 0.8328 before settling near 0.7310/15.
1 hour/4 hour indicators: Turning higher Daily Indicators: Up Possible topping formation. Weekly Indicators:  Turning higher
Preferred Strategy:  While the medium term charts look constructive for further gains, buying dips would seem to be the plan although I am reluctant to get long given that the dailies are now becoming overbought. The short term momentum indicators also look positive though so I would not be looking to sell it here. Note the minor double top immediately ahead which may provide interim resistance, but with stop likely above 0.7340/45. Stand aside.
Resistance Support
0.7400 Minor 0.7300 Pivot
0.7375 (76.4% of 0.7557/0.6780) 0.7267 Session low
0.7360 Minor 0.7245 18 Jan low
0.7343 22 Sept high 0.7215 Minor
0.7330/29 17 Jan high/Session high 0.7200 (23.6% of 6780/0.7330)