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

By | November 23, 2017


EURUSD: 1.1820
EurUsd is higher today, after some soggy US data and a mildly dovish outlook of the FOMC Minutes, and is closing the day at near the 1.1826 high.

The momentum indicators are aligning higher, and further gains look possible, so buying dips is currently favoured although the weeklies do point lower so in the bigger picture I would expect conditions to be choppy but with a near term upside bias.

If so, above 1.1825/30 would open the way to 1.1855/60, above which would find good sellers at 1.1880/85, beyond which would allow a run towards 1.1900+.

On the downside, minor support will today be seen at 1.1780/1.1800 ahead of stronger levels at 1.1735 although this looks unlikely to be seen on Thursday.

Preferred Strategy:  For Thursday, I prefer to adopt a fairly neutral stance given the US Thanksgiving holiday, although buying dips may be a plan.

The German  Q3 GDP & Nov Markit EU Mfg/Services PMIs are data risks today, while speeches from the ECB’s Praet and Coeure, which could impact holiday thinned markets

24 Hour: Neutral –Prefer to buy dips Medium Term: Neutral – Prefer to sell rallies
FX Charts Position: Flat
Resistance Support
1.1900 Minor 1.1800 Minor
1.1885 (61.8% of 1.2091/1.1553) 1.1775 Minor
1.1857/59 20 Oct high/16 Nov high 1.1735/31 100 DMA /Session low
1.1825 Session high 1.1712 21 Nov low
1.1812 Daily cloud base 1.1671 (61.8% of 1.1553/1.1859)

Economic data highlights will include:                                                                                  

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

USDJPY: 111.22
US$Jpy had a one way session in heading down to 111.14 on the back of the soft US data/FOMC Minutes, and having taken out some important support levels we could see further downside momentum ahead.

The momentum indicators are generally looking heavy, and a test of 111.00 – and lower – would not surprise although the hourlies are now at oversold extremes and it may be worth waiting to see if we can head back towards the important 111.70 level to sell into.

Preferred Strategy:  It looks as though the market is generally trapped in being short Jpy so there will be plenty of sellers into dollar rallies from those looking to cut positions. Selling rallies is preferred today.

24 Hour: Neutral – Prefer to sell rallies? Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
112.20 Minor 111.14 Session low
112.00 (23.6% of 114.73/111.14) /200 WMA 111.00 (50% pivot of 107.31/114.73)
111.85 Minor 110.60 Minor
111.70 100 DMA/200 DMA 110.30 100 WMA
111.50 Minor 110.15 (61.8% of 107.31/114.73)

GBPUSD: 1.3320
Sterling shrugged off the underwhelming UK budget statement, and despite Brexit woes and a bleak UK growth forecast (expectation for 2017 was cut down from 2.0% to 1.5%, to 1.4% for 2018 and to 1.3% for 2019 and 2020), it then rallied to a 5 week high of 1.3323, closing nearby.

The momentum indicators appear to be picking up some mildly positive impetus and further gains do seem possible, where a break of 1.3340 would allow a run to 1.3400+, possibly to where the major descending trend resistance from the 2014 high comes in at 1.3460.

On the downside, minor support will now be seen 1.3280/00 ahead of 1.3240 and buying dips would currently seem to be the plan.

Preferred Strategy:  Overall I remain neutral, albeit growing cautiously bullish. Q3 GDP today.

Buy GbpUsd @ 1.3250. SL @ 1.3090, TP @ 1.3400

24 Hour: Neutral  -Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat (Long GbpAud)
Resistance Support
1.3450 Minor 1.3300 Minor
1.3415 (61.8% of 1.3656/1.3073) 1.3280 Minor
1.3380 Minor 1.3240 100 HMA
1.3337/41 13 Oct high/(50% pivot of 1.3656/1.3073) 1.3210/12 100 WMA /Session low
1.3323 1.3185 20 Nov low

Economic data highlights will include:                                                                                                                          

UK Q3 GD, Preliminary Total Business Investment (Q3)

USDCHF: 0.9819
US$Chf traded lower today, breaking through the previous rising trend support and looking as though it wants to test further downside levels, although it is currently sitting right on the 200 DMA which may provide near term  support.

With the daily momentum indicators pointing increasingly lower though, a break of 0.9800 would allow a run towards 0.9725/30.

On the topside, minor resistance will be seen at 0.9850 and at 0.9875 and selling into strength today would seem to be the plan, with a SL placed above 0.9915.

Preferred Strategy:  Sell US$Chf @ 0.9880. SL @ 0.9915, TP @ 0.9780

24 Hour: Prefer to sell rallies Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
0.9946 21 Nov high 0.9810 200 DMA /Session low
0.9914 Session high/200 HMA 0.9800 (38.2% of 0.9420/1.0037)
0.9900 Minor 0.9775 Minor
0.9875 Minor 0.9750 Minor
0.9845 Minor 0.9727 (38.2% of 0.9420/1.0037)

AUDUSD: 0.7618
AudUsd lifted sharply after the FOMC Minutes and has so far reached 0.7617, closing nearby.

With the momentum indicators looking increasingly positive a test of the descending trend resistance at 0.7630 would not surprise, above which would open up a move towards the 13 Nov high of 0.7665. Beyond this would then allow a run towards 0.7675/80 and possibly 0.7695/0.7700.

The downside will now find minor support at 0.7590/0.7600 and then at 0.7565 and 0.7550 ahead of the stronger 0.7530/35, area, 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).

Preferred Strategy:  In the absence of any data and due to a holiday-thinned market, a quiet day near current levels would not surprise.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position:    Flat
Resistance Support
0.7695 10 Nov high 0.7600 3m
0.7665 13 Nov high /(23.6% of 0.8102/0.7531) 0.7590 200 HMA
0.7650 Minor 0.7565 100 HMA
0.7630 Descending trend resistance 0.7550 Minor
0.7617 Session high 0.7531 21 Nov low  /100 WMA

NZDUSD: 0.6877
The Kiwi has moved higher on Wednesday to test the descending trend resistance at 0.6885, where it is currently sitting.

With the momentum indicators now generally pointing higher, a test of 0.6900 looks possible, above which would allow a move to 0.6920 and 0.6935, albeit not today.

The initial support now lies at 0.6855 ahead of the stronger level at 0.6790/6800. Below this would 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.

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 the downside. In the short term I suspect a test of 0.6920/30 may lie ahead. Today could be quiet ahead of the US holiday but the domestic NZ Q3 Retail Sales come out in 45 minutes (exp 0.4%qq)

24 Hour: Mildly Bullish Medium Term: Mildly Bearish – Prefer to sell rallies
FX Charts Position: Flat
Resistance Support
0.6950 Minor 0.6870 Minor
0.6933 (23.6% of 0.7434/0.6783) 0.6855 200 HMA
0.6918 15 Nov high 0.6820 Minor
0.6900 Minor 0.6788 21 Nov low
0.6886 Descending trend resistance 0.6779 17 Nov low

Economic data highlights will include:                                                                                                                           

Retail Sales