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

By | October 23, 2017

 

EURUSD: 1.1779

 

Preferred Strategy:    EurUsd was choppy but headed lower into the close on Friday with headlines over the possibility of Trump appointing Powell or Taylor to the Fed underpinning both yields and the dollar. This week will look to the PMIs and then to Thursday’s ECB Meeting for guidance, with Mario Draghi’s press conference likely to be the main focus of the week, when we discover the level of tapering to be undertaken by the ECB over the next few months. Technically, the Head/Shoulder formation still seems to be under construction, with the neckline at 1.1880.  This level ties in with the major descending trend resistance and should see good selling interest if we get there. The dailies are pretty flat but the short term momentum indicators have a dovish tilt and would seem to be headed back towards good support at 1.1720/30 and possibly to 1.1700. As before, as long as we stay under 1.1880 I am happy to stay short, with the need to keep a tight SL in place above 1.1900. The H/S objective is at around 1.1250.

Sell EurUsd @ 1.1820. SL @ 1.1890, TP @ 1.1700.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
Resistance Support
1.1895 Minor 1.1761 Friday low
1.1879/82 12 Oct high/(50% of 1.2092/1.1669)/Descending trend resistance 1.1729 18 Oct low
1.1857 Friday high 1.1720 (76.4% of 1.1668/1.1880)
1.1825 Minor 1.1700 Minor
1.1810 200 HMA 1.1668 6 Oct low

Economic data highlights will include:

M:  BuBa Monthly Report, Chicago Fed National Activity Index, EU Provisional Consumer Confidence

T:  EU/US Flash PMIs, Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory

W:  German IFO Business Climate/Expectations, US Durable Goods Orders, House Price Index, New Home Sales, EIA Crude Oil Stocks Weekly Change

T: German Consumer Confidence, ECB Interest Rate Decision, Statement, Press Conference, US Goods Trade Balance, Pending Home Sales, Kansas Fed Mfg Activity

F: US Q3 GDP, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count



USDJPY: 113.49
Preferred Strategy: US$Jpy finally took out the recent highs on Friday and traded up to 113.56 and now, having broken decent downtrend resistance, looks capable of heading higher. There is not a lot of resistance ahead of 114.00, above which there is again very little to be seen until 114.50.On the downside, minor support today should arrive at 113.20/00 below which 112.80 and Friday’s low of 112.50 should provide decent backup. Below there, the 19 Oct low at 112.30, and the 18 Oct low at 112.12 would attract. Looking for levels to buy dollar again seems to be the plan but the market is already short of Yen and so caution is warranted as any need for safe haven demand could see some very quick and painful dips.

Buy US$Jpy @ 113.15. SL @ 112.70, TP @ 114.40.

24 Hour: Prefer to buy dips Medium Term: Neutral
                                         Resistance Support
114.85 Minor 113.20 Minor
114.49 11 July high 113.00 Minor
114.20 Minor 112.80 Minor
113.95 Minor 112.50 Friday low /Rising trend support
113.56 Friday high 112.30 19 Oct low

Economic data highlights will include:

M:  Japan Election Result, Leading Economic Index, Coincident Index

T: Nikkei Mfg Flash PMI

W:

T: Foreign Bond/Stocks Investment

F: CPI



GBPUSD: 1.3187
Preferred Strategy:  Sterling had a strong session on Friday, in rising from its lows of 1.3087 to a high of 1.3200, on talk of a soft Brexit. While the dailies remain flat, suggesting further choppy, sideways trade, the short term momentum indicators look positive for Monday and a run towards the descending trend resistance at 1.3230 would not surprise. A break of this would allow a move towards 1.3280 and potentially back to the mid October high of 1.3337. On the downside, minor support will be seen at 1.3160 and at 1.3130 ahead of 1.3100. While not getting overexcited for further positive momentum, I prefer to look to buy dips, hoping for a move back to 1.3300.

Buy GbpUsd @ 1.3130. SL @ 1.3085, TP @ 1.3280.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
1.3337 14 Oct high/100 WMA 1.3160 Minor
1.3311 16 Oct high 1.3130 Minor
1.3286 17 Oct high 1.3087 Friday low
1.3230 Descending trend resistance 1.3075 Minor
1.3211/15 18 Oct high /200 HMA 1.3026 6 Oct low

Economic data highlights will include:

M:  UK CBI Distributive Trade Survey – Orders

T:

W: UK Q3 GDP, Inflation Report Hearing

T:

F:



USDCHF: 0.9843
Preferred Strategy:  US$Chf  finished the week at 5 month highs and appears to be building the momentum for the next leg higher, eventually towards parity and above I think. Good resistance lies right ahead at the 100 WMA but above here, as suggested by the short term momentum indicators would hint at a run towards 0.9880 and then there is little to stop a run to 0.9940. On the downside, support will be seen at 0.9815 (200 DMA) a break of which would take us back into the area of prolonged consolidation. Staying long and buying dips is preferred.

Buy US$Chf @ 0.9820. SL @ 0.9975, TP @ 0.9940.

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
Resistance Support
0.9940 (76.4% of 1.0343/0.9420) 0.9835 Minor
0.9920 Minor 0.9815 200 DMA
0.9900 Minor 0.9785 Minor
0.9880 (50% pivot of 1.0343/0.9420) 0.9767 200 HMA
0.9850/52 100 WMA /Friday high 0.9753 Friday low/Rising trend support

Economic data highlights will include:

M:

T:

W: ZEW _ Expectations

T:

F:



AUDUSD: 0.7815
Preferred Strategy:   After an early move up to 0.7881 on Friday, the Aud remained heavy into the rest of the session  and closed just above the day’s lows of 0.7808, placed under pressure as the US$ & Treasury yields rallied broadly.  Having been looking positive, the dailies now seem to be running out of steam on the topside, and with the short term momentum indicators also looking heavy at test of 0.7800 and lower seems imminent. Below 0.7800, the next targets would be 0.7770 and the 0.7732. On the topside, resistance will be seen right here, at 0.7820, above which could squeeze towards 0.7850 and even back to 0.7880 although this looks rather doubtful.

Sell AudUsd @ 0.7835. SL @ 0.7860, TP @ 0.7735.

24 Hour: Prefer to sell rallies Medium Term: Neutral
Resistance Support
0.7889 16 Oct high 0.7807 Friday low
0.7881 Friday high 0.7785 Minor
0.7855 Minor 0.7770 11 Oct low
0.7835 Minor 0.7750 Minor
0.7820 100 DMA 0.7732  6 Oct low

Economic data highlights will include:

M:  RBA Annual Report, China House Price Index

T:

W: Australian CPI (Q3)

T:  Australian Import/Export Index (Q3)

F:  Australian PPI



NZDUSD: 0.6964
Preferred Strategy:   The Kiwi remains very heavy following the election result and would seem to have further to go on the downside, particularly once NZ Labour begins to implement some of their policies.  The short term momentum indicators are now rather oversold but selling rallies would still seem to be the plan, looking for a run towards 0.6900 and even to the 0.6817 May 2017 low. On the topside, minor resistance will be seen at 0.7000 and above that at 0.7015 and 0.7035. Today is a NZ holiday, so there may be a brief reprieve in the selling pressure.
24 Hour: Prefer to sell rallies Medium Term: Bearish
Resistance Support
0.7050 (38.2% of 0.7210/0.6953) 0.6953 Friday low
0.7035 Minor 0.6920 Minor
0.7015 (23.6% of 0.7210/0.6953) 0.6900 Minor
0.7000 Minor 0.6880 Minor
0.6980 Minor 0.6850 Minor

Economic data highlights will include:

M:  NZ Labour Day Holiday

T:

W:

T:  NZ Trade Balance

F: