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

By | January 22, 2018

The US$ is opening the inter-bank market on a slightly softer note, creating a minor chart gap on various pairs. Today’s direction will take its cue from how talks progress in the US Senate to resolve the issue of the Government shutdown.

EURUSD: 1.2218
EurUsd saw a brief spike to 1.2295 on Friday but then slid steadily lower, with the dollar making slow but steady gains, seemingly unworried by the prospect of a US Government shutdown. The pair finished on their lows but well above the week’s low of 1.2165.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  A neutral stance seems wise at the start of the week with the momentum indicators showing little change from Friday. The short term momentum indicators are pointing a little lower, so a retest of 1.2200/1.2170 would not surprise, but with the dailies still looking positive, a return to the trend high should not be discounted either.

NB. The Euro is opening inter-bank trade on Monday at 1.2265. A cautious stance is required.

Buy EurUsd @ 1.2170. SL @ 1.2280, TP @ 1.2135

Resistance Support
1.2335 Minor 1.2218 Friday low
1.2322 17 Jan high 1.2165 17 Jan low
1.2295 Friday low 1.2140 23.6% of 1.1553/1.2295/200 HMA
1.2275 H/S Neckline 1.2120 Minor
1.2260 Minor 1.2100 Minor

Economic data highlights will include:

M:  German BuBa Monthly Report, Chicago Fed National Activity Index

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

W: Eurogroup Meeting, EU/US Flash Manufacturing/Services/Composite PMIs, US Existing Home Sales, EIA Crude Oil Stocks Weekly Change

T: EcoFin Meeting, German IFO Business Climate/Expectations, ECB Interest Rate Decision, Monetary Policy  Statement, US Jobless Claims, Wholesale Inventories, New Home Sales, Kansas Fed Mfg Activity,  World Economic Forum- Davos



USDJPY: 110.80
US$Jpy  traded most of Friday in the 111.00/110.50 range with the Yen making some daily gains on most fronts, with EurJpy and GbpJpy, in particular, trading lower . It could be a fairly tight session today, with little economic data to move markets, while traders will be waiting to see what Kuroda has to say at tomorrow’s BOJ Meeting. No change is expected to Monetary Policy.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  A neutral stance is required on Monday although the medium term charts do hint that the dollar is going remain under some pressure. At the same time we have a fair bit of support near 110.00 so the downside momentum, if seen, should be fairly slow.
Resistance Support
112.20 100 DMA 110.48 Friday low
111.70 200 DMA 110.19 17 Jan low
111.47 18 Jan high 110.00 Rising trend support
111.12 Friday high/ 200 HMA 109.90 100 WMA
110.80 100 HMA 109.70 Minor

Economic data highlights will include:

M:

T:    BOJ Interest Rate Decision/Statement/Press Conference/Outlook

W: Trade Balance, Nikkei Mfg Flash PMI, Leading Economic Index, Coincident Index

T:

F: Japan CPI, BOJ Minutes



GBPUSD: 1.3851
Sterling has had another seesaw ride after the miss by the December UK Retail Sales on Friday (-1.5%mm v exp of -0.6%, +1.4%yy v exp of +3%), and after reaching a new post Brexit high of 1.3944, it then fell sharply, to 1.3838 before making a partial recovery into the week’s NY close.
1 hour/4 hour indicators: Mixed. –Turning lower? Daily Indicators: Up Weekly Indicators:  Up
Preferred Strategy:  The 4 hour momentum indicators are now turning lower, while the longer term carts still generally look positive, but Cable remains volatile so caution is warranted. Buying dips seems to be the theme still, but, with a relatively tight SL placed back below 1.3800.

Buy GbpUsd @ 1.3800. SL @ 1.3760, TP @ 1.3940

Resistance Support
1.4000 Psychological 1.3850 Minor
1.3975 Minor 1.3838 Friday low
1.3942/44 17 Jan high/Friday high 1.3825 Minor
1.3913 18 Jan high 1.3805 18 Jan low
1.3885 Minor 1.3756 17 Jan low

Economic data highlights will include:

M:

T:

W:  UK Unemployment

T:

F:



USDCHF: 0.9638
US$Chf fell hard through the 0.9570 support on Friday, spiking down to 0.9535 before an impressive rally saw the dollar close on its highs at 0.9630, with the short term momentum indicators looking positive for further gains in the coming session, albeit that the dailies still point lower.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  The daily charts still look heavy but the 4 hour momentum indicators look more constructive on Monday, 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 be seen at 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 0.9600 Minor
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 0.9535 Friday low
0.9628 Friday high 0.9515 Minor


AUDUSD: 0.7983
 AudUsd is still trading at close to 0.8000, after reaching a Friday high of 0.8038 but then turning lower, under pressure from sales of AudJpy. A late US selloff saw it close on session lows at 0.7985.
1 hour/4 hour indicators: Down Daily Indicators: Up – Becoming Overbought Weekly Indicators:  Neutral – Turning higher?
Preferred Strategy:  The longer term uptrend remains firmly intact, although the daily charts warn of a correction, with the appearance of some bearish divergence and a long upper wick forming on the daily candle. 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.

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

Resistance Support
0.8102 20 Sept high 0.7992 Friday low
0.8080 Minor 0.7980 Minor
0.8055 200 MMA 0.7960 Minor
0.8036/38 21 Sept High/Friday high 0.7940 17 Jan low
0.8022 17 Jan high 0.7900/10 23.6% of 0.7510/0.7998 / Rising trend support

Economic data highlights will include:

M:

T:

W:

T:

F: Australia Day Holiday



NZDUSD: 0.7272
The Kiwi is trading near Friday’s low of 0.7273 after failing to hold earlier session gains that saw it reach 0.7322, with much of the weakness being seen through sales of NzdJpy. The momentum indicators are mixed but for the time being they seem to retain an overall positive bias although the dailies may be building a topping formation so some caution is warranted. The NZ Q4 CPI is the key data risk this week for the Kiwi.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up Possible topping formation. Weekly Indicators:  Turning higher
Preferred Strategy:  While the medium term charts look constructive for further gains, the short term momentum indicators are inconclusive, possibly pointing slightly lower, and show a degree of bearish divergence so stay neutral for now.
Resistance Support
0.7375 (76.4% of 0.7557/0.6780) 0.7273 Friday low
0.7360 Minor 0.7260 Minor
0.7343 22 Sept high 0.7245 18 Jan low
0.7330 17 Jan high 0.7215 Minor
0.7322 Friday high 0.7200 (23.6% of 6780/0.7330)

Economic data highlights will include:

M:

T:

W:

T:  NZ Q4 CPI, ANZ Activity Outlook

F: