22 May: Forecast: FX: US$/Majors

By | May 22, 2017

 

EURUSD: 1.1207

The EurUsd rally resumed on Friday after some brief consolidation and eventually reached the first major Fibo resistance at 1.1210 which has so fur capped further progress. The Euro was helped along by increased enthusiasm over the EU economic outlook, and with the daily charts still pointing higher further gains look possible in the days ahead.

If so, above Fridays high of 1.1211, there is little to stop it heading back to 1.1300 although with little data due today it may struggle, and the short term momentum indicators hint at some possible consolidation.  If wrong, beyond 1.1300, the points to watch are at 1.1365 (18 Aug high), 1.1427 (24 June high) and then 1.1450 (major descending trend resistance)

In the short term, the 4 hour momentum indicators are hinting at some bearish divergence, so I would not be surprised to see some consolidation/correction on Monday.  If so, minor support will be seen at 1.1175 and 1.1145, below which, could see a run back towards 1.1120 and eventually to 1.1060/70 although I doubt that we head close to here today.

24 Hour: Possible range trade – Prefer to buy dips Medium Term: Mildly Bullish
                                          Resistance Support
1.1326 8 Sept high 1.1175 Minor
1.1300 9 Nov high 1.1145 Minor
1.1275 Minor 1.1122 (23.6% of 1.0838/1.1211)
1.1250 Minor 1.1100 Minor
1.1210 (23.6% of 1.3993/1.0340)/Friday high 1.1068/60 (38.2% of 1.0838/1.1211) / (23.6% of 1.0586/1.1211)

Economic data highlights will include:

M:  BuBa Monthly Report, Chicago Fed National Activity Index

T:  German GDP (Q1), EU Flash Mfg/Services/Composite PMIs, German IFO Business Climate/Expectations , EU Financial Stability Report , US New Home Sales, Flash Mfg/Services/Composite PMIs, Richmond Fed Mfg Index , API Weekly Crude Oil Stock Inventory

W: German Consumer Confidence, US House Price Index, Existing Home Sales, FOMC Minutes, EIA Crude Oil Stocks Weekly Change



USDJPY: 111.27

US$Jpy had a choppy session on Friday in trading a range of 111.03/69, well supported above 111.00 but unable to overcome the Wednesday high of 111.73.

While the dailies still point lower, the 4 hour charts are recovering after having become oversold and further short term gains would not surprise. If so, look for good resistance in the 111.70/80 range, but a break of which could then see a move towards 112.00 and 112.30, which might be a decent sell area if we get there.

On the downside, the initial support will be seen at 111.00 and 110.70 ahead of Thursday’s low of 110.23. A break of this would then find little support until we reach 109.60, albeit not today. Another choppy session in the 111.00/112.00 would not surprise on Monday.

24 Hour: Prefer to buy dips Medium Term: Prefer to sell rallies
                                         Resistance Support
112.50 Minor 112.50 Minor
112.30 (50% of 114.36/110.23) 112.30 (50% of 114.36/110.23)
112.00 Minor 112.00 Minor
111.81 (38.2% of 114.36/110.23) 111.81 (38.2% of 114.36/110.23)
111.73 17 May high 111.73 17 May high

Economic data highlights will include:

Nikkei Flash Mfg PMI, All Industry Activity Index.


GBPUSD: 1.3037

Cable had a wild ride at the end of last week, but spent Friday in recovery mode following Thursday’s steep sell-off, closing back above 1.3000, at session highs of 1.3040.

The momentum indicators are looking mildly positive on Monday although good resistance lies right ahead at last Thursday’s, 8-month high of 1.3047. Above this would find strong offers at 1.3075, and then, further out, at the long descending term trend resistance at around 1.3120. A break of this looks important and could lead to a quick run towards 1.3270 although that remains to be seen.

On the downside, back below 1.3000 would find minor bids at 1.2980 and 1.2930 ahead of stronger support in the band between 1.2890/1.2910, below which could return to the increasingly distant 16 May low of 1.2865.

24 Hour: Prefer to buy dips Medium Term:  Mildly Bullish
                                         Resistance           Support
1.3120 Descending trend resistance 1.3000 Minor
1.3100 Minor 1.2960 Minor
1.3075 (23.6% of 1.7191/1.1821) 1.2930 200 HMA
1.3047 18 May high 1.2914 Friday low
1.3039 Friday high 1.2888 18 May low

Economic data highlights will include:

M:

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

W:

T: UK Provisional GDP (Q1), Total Business Investment

F:



USDCHF: 0.9727

After some choppy consolidation US$Chf continued to move lower, reaching 0.9725 on Friday, pretty much where it finished the week.

The daily momentum indicators are still pointing sharply lower  and further downside momentum seems highly likely in the days ahead although the 4 hour charts look slightly oversold, so further short term consolidation may be needed on Monday.

If we do head lower, then below the 0.9725 the next support; the major long-term rising trend line, lies nearby at 0.9705. This should be strong, but a break of 0.9700 would then open the way to 0.9675 and to 0.9600/40 below which could see a return to the 9 Nov low at 0.9550.

On the topside, the initial, minor resistance will come in at 0.9760 and at 0.9785, above which could see a run back to 0.9800/10, which should be strong if we get there today and may present a decent sell opportunity although I doubt that we see it.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
                                         Resistance Support
0.9870 (38.2% of 1.0100/0.9725) 0.9725 Session low
0.9813 (23.6% of 1.0100/0.9725) 0.9705 Rising trend support
0.9804 Friday high 0.9675 Minor
0.9785 Minor 0.9640 Minor
0.9760 Minor 0.9600 Minor

Economic data highlights will include:

M:  RBA Debelle Speech

T: Trade Balance

W:  Industrial Production

T:

F:


AUDUSD: 0.7456

The Aud had a choppy Friday session but generally squeezed higher from the early 0.7407 lows to reach a high of 0.7469, before closing at 0.7458.

Technically, the 1 and 4 hour charts look slightly positive on Monday, while the dailies also look mildly constructive and it may be that we are in for a sterner test of the 2 month downtrend line, which ties in with Friday’s high.

Beyond 0.7470 would open the way to the Fibo level at 0.7502, beyond which would open up 0.7540, although probably not today..

On the downside, minor support is seen at 0.7425, ahead of 0.7395/0.7405 and the recent lows at 0.7384/88. Below this would open the way to the 12 May low of 0.7366 and 0.7350 (minor), ahead of the stronger 0.7330 level. Back below the 9 May low of 0.7328 would find little to hold the Aud up until 0.7300 and the rising trend support, at 0.7285, although this seems unlikely to be seen for a while.

For Monday, buying dips would seem to be the plan, looking for a run back towards 0.7500. There is little local data due this week and external factors are likely to drive the pair.

24 Hour: Prefer to buy dips Medium Term: Neutral
                                         Resistance                                         Support
0.7545 3 May high 0.7425 Minor
0.7525 Minor 0.7407 Friday high/18 May low
0.7502 (76.4% of 0.7555/0.7328) 0.7388/84 17 May low/15 May low
0.7485 Minor 0.7366 12 May low
0.7468/66 (61.8% of 0.7555/0.7328)/18 May high/Descending trend resistance /Friday high 0.7330/28 (50% pivot of 0..6826/0.7835)/ 9 May low

Economic data highlights will include:

M:  WBC Leading Economic Index, Construction Work Done (Q1)

T:

W:

T:

F:


NZDUSD: 0.6925

The choppy action continued on Friday although the Kiwi finished near session highs of 0.6938, having recovered from an earlier low of 0.6880.

More of the same looks likely early in the week although the momentum indicators look slightly positive, and on the topside, the initial resistance will be seen at the 18 May high of 0.6949. Beyond 0.6950, there is reasonable resistance ahead of 0.6970, but a break of which could quickly see a return to 0.7000 and then possibly to the 100 DMA, at 0.7048.

On the downside, 0.6900 may continue to act as a pivot ahead of the strong support seen at the 100 WMA at 0.6870 and the previous lows of 0.6862 and 0.6851. Under there, the next support will arrive at 12 May’s low of 0.6826, although that looks fairly safe right now.

For the time being, given the series of higher daily lows since May 11, buying dips does appear to be the near term plan, but keep stops tight under 0.6850.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
0.6998 (76.4% of 0.7052/0.6817) 0.6880 Friday low
0.6968 3 May high 0.6870 100 WMA
0.6960 (61.8% of 0.7052/0.6817) /55 DMA 0.6851 15 May low
0.6944/49 17 May high /18 May high 0.6826 12 May low
0.6938 Friday high 0.6805 (50% pivot of 0.6125/0.7485)

Economic data highlights will include:

M:

T:

W: NZ Trade Balance

T: Budget Release

F: