24 Apr: Forecast: FX: US$/Majors + trade ideas

By | April 24, 2018


EURUSD: 1.2209
EurUsd traded lower on Monday in falling to 1.2197, under pressure from higher US bond yields and with the Euro not helped by the unimpressive EU PMIs. The IFO will be in focus today, ahead of the US New Home Sales and Richmond Fed Mfg Index
1 hour/4 hour indicators: Mixed. Daily Indicators: Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The 4 hour momentum indicators looking heavy on Tuesday although the hourlies are turning a little higher and may need to do some correctional work to the topside, where 1.2215 will provide some minor resistance ahead of 1.2250 and the initial Fibo level, now at 1.2262. I doubt we see it above here today but if wrong look for a squeeze back towards the session high at 1.2288 and to 1.2300.

The 4 hour charts look heavy though and a sustained break of 1.2200 could then head towards Fibo/100 DMA support at 1.2170/75, below which would target 1.2085 and possibly 1.2025 although this remains over the horizon for now.

Sell EurUsd @ 1.2225. SL @ 1.2280, TP @ 1.2125

Resistance Support
1.2302 (38.2% of 1.2475/1.2197) 1.2197 100 DMA /Session low
1.2288 Session high 1.2172 (38.2% of 1.0340/1.2555)
1.2262 (23.6% of 1.2475/1.2197) 1.2154 1 March low
1.2250 Minor 1.2125 Minor
1.2215 Minor 1.2100 Minor

Economic data highlights will include:        

German IFO Business Climate/Expectations, Case Shiller House Price Index, US New Home Sales, House Price Index, Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory

USDJPY: 108.70
US$Jpy headed up to 108.75 on Monday, closing nearby and with the dollar firmly underpinned by the rising US Treasury yields.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher? Weekly Indicators:  Turning higher
Preferred Strategy:  As before, the daily momentum indicators retain a constructive bias and seem set to head higher still, with the 4 hour charts now also looking very positive. The weeklies are also turning higher and sentiment does appear to be accelerating so buying dips still seems to be the plan.

On the topside, back above the session high of 108.75, would find offers 109.00/05, at 109.15 and at 109.65 although this remains some way off. As we said yesterday, note the reverse SHS formation, with the neckline at 107.85, which has now been broken and suggests a target at somewhere near 110.70.

On the downside, buyers will be seen at 108.50 (minor), at 108.25 and at 108.00 ahead of the neckline (107.85) and the session low at 107.65. This looks unlikely to be seen again today though and trading from the long side is again preferred.

Buy US$Jpy @ 108.20. SL @ 107.60, TP @ 110.50

Resistance Support
109.65 (50% of 114.73/104.60) 108.50 Minor
109.30 Minor           108.25 Minor
109.15 (50% of 113.75/104.60) 108.00 Minor
109.05 100 DMA 107.65 Session low
108.75 Session high 107.34 Friday low

Economic data highlights will include:

All Industry Activity Index



F: Tokyo CPI, Industrial Production, Retail Sales, BOJ Meeting/Interest Rate Decision/Statement/Outlook

GBPUSD: 1.3938
Cable remained under heavy pressure from a resurgent US$ on Monday but also continues to suffer from Carney’s comments last week in his dovish shift in BoE expectations for a May rate hike.  Monday saw a low of 1.3925, a new 5 week low, and looks heavy still as we head into Tuesday.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning lower? Weekly Indicators:  Turning higher?
Preferred Strategy:   The hourlies are showing some minor bullish divergence, but with the 4 hour momentum indicators pointing sharply lower, a break of 1.3925 would allow a run to the Mid-March lows at 1.3913/1.3890, below which there is not too much to stop a run to 1.3865 (76.4% of 1.3710/1.4376).

On the topside, sellers will arrive today at minor levels at 1.3965 and 1.3980 ahead of 1.4000 and the Fibo level at 1.4030, and further out at 1.4095 although this looks unlikely to be seen again for a while. Take a nimble stance today, but technically is does appear that further downside pressure may come about, looking for a run towards 1.3965.

Resistance Support
1.4070 Minor 1.3925 Session low
1.4030 Session high /(23.6% of 1.4376/1.3925) 1.3913 19 Mar low
1.4000 Minor 1.3890 16 Mar low
1.3980 Minor 1.3868 (76.4% of 1.3710/1.4376)
1.3965 Minor 1.3850 Minor

Economic data highlights will include:

Public Sector Net Borrowing Requirements, CBI Distributive Trade Survey – Orders

USDCHF: 0.9781
US$Chf had another squeeze higher on Monday as it moved up from 0.9750 to 0.9787, closing at the highs.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:   Turning higher
Preferred Strategy:  The short term momentum indicators still look positive for further gains, although the hourlies appear to show some minor bearish divergence, but there is no change to the view of trading from the long side.  Minor support will arrive at 0.9750 and at 0.9735 ahead of Friday’s low of 0.9705 and buying dips is preferred. Further out,  if the dollar falls back below the 0.9690 (200 WMA/Weekly cloud base), we could then see a return to the 200 DMA/18 Apr low at 0.9655/50, below which stops would be triggered and we could see a return to 0.9625, although that currently looks unlikely. As long as we remain above the rising trend support I prefer to buy the dips although the recent acceleration higher has now seen the pair move away from the trendline which currently lies some way off, at 0.9625.

On the topside, the longer term momentum indicators are now picking up a bit of speed and beyond 0.9785/90 could see a run towards 0.9805/15 and then on to 0.9835 although possibly not today. If wrong, further gains could open the way to 0.9900 and then to 0.9975/1.0000.

Buy US$Chf @ 0.9740. SL @ 0.9785, TP @ 0.9835

Resistance Support
0.9845 10 Jan high 0.9750 Minor
0.9835 (76.4% of 1.0038/0.9187) 0.9736 Session low
0.9815 11 Jan high 0.9705 Friday low
0.9800 Minor 0.9690 200 WMA/Weekly cloud base
0.9787 Session high/100 WMA 0.9665 19 April low

Economic data highlights will include:                                                                     

Trade Balance

AUDUSD: 0.7604
The Aud had another tough session on Monday in falling to a low of 0.7600 where it has closed the day, currently sitting right on the rising trend line support commencing in Jan 2106.

Strong US bond yields did much of the damage and will keep the pressure on the downside, although the focus will today turn to the Australian Q1 CPI (exp 0.5%qq, 2.0%yy, Trimmed Mean; 0.5%qq, 1.8%yy, where a soft reading would keep the pressure firmly on the downside.

1 hour/4 hour indicators: Mixed. –Turning lower. Daily Indicators: Neutral Weekly Indicators:  Neutral
Preferred Strategy:   The Aud as seen some decent damage done on Monday, in taking out several important layers of support, and currently sits right on the major rising trend line at 0.7600. Below this would then move towards a minor level at 0.7570 ahead of Fibo support at 0.7520/30 and the early December low of 0.7501.

On the topside, resistance will be seen at 0.7602 (minor) and at 0.7640/50, which if seen today would be a reasonable sell level I suspect. Above 0.7650 would allow a run to 0.7665 and to 0.7680 although this looks rather doubtful.

Selling rallies is preferred.

Sell AudUsd @ 0.7635. SL @ 0.7685, TP @ 0.7525

Resistance Support
0.7680 (38.2% of 0.7813/0.7600) 0.7600 Rising trend support/Session low
0.7665 Minor 0.7570 Minor
0.7650 (23.6% of 0.7813/0.7600) 0.7530 (61.8% of 0.7160/0.8135)
0.7640 100 WMA 0.7519 (76.4% of 0.7328/0.8135)
0.7620 Minor 0.7501 8 Dec low

Economic data highlights will include:


NZDUSD: 0.7153
 The Kiwi, as with the Aud, has had another tough session in falling from 0.7217 to a low of 0.7144 in making a new 2018 low.
1 hour/4 hour indicators: MixedTurning lower. Daily Indicators:  Turning lower Weekly Indicators:  Turning Neutral
Preferred Strategy:   The hourly momentum indicators look to be trying to form a short term  base for the Kiwi  but with the 4 hour/daily momentum indicators pointing lower  I think we are going to see lower levels ahead. If so, a break of 0.7140 could see an acceleration towards 0.7105/10 and then to 0.7080/85, which should be strong if/when we get there.

On the other hand, if the hourlies can produce a topside squeeze the Kiwi could head back to 0.7165 and possibly to 0.7185, which would seem to be a decent level to sell the pair. If wrong, beyond that, would allow for 0.7200 and then 0.7235/40 but this seems unlikely for a while.

Sell NzdUsd @ 0.7170. SL @ 0.7205, TP @ 0.7090

Resistance Support
0.7240 (38.2% of 0.7395/0.7145) 0.7145 Session low
0.7215 Minor 0.7125 Minor
0.7203 (23.6% of 0.7395/0.7145) 0.7107 (50% pivot of 0.6780/0.7438)
0.7185 200 DMA 0.7085 Rising trend support
0.7165 Minor 0.7072 3 Jan low

Economic data highlights will include:                                                                                        

NZ Visitor Arrivals – Mar