25 May: Forecast: FX: US$/Majors

By | May 25, 2017


EURUSD: 1.1218

The Euro held on above the 1.1160 support on Wednesday, and after a mostly quiet session it finally broke back above 1.1200 following the release of the FOMC Minutes, finishing towards the high of 1.1216.

While the dailies still look constructive, the short term momentum indicators are now mixed and I suspect that Thursday may be a choppy but rather directionless session in the absence of much of Europe, who will be on holiday. If so, further upside progress above the session high could take us back to the previous session/trend high of 1.1268. Beyond there, there is little to stop it heading back to 1.1300, and above that, the points to watch are at 1.1365 (18 Aug high), 1.1427 (24 June high) and then at 1.1450 (major descending trend resistance).

On the downside, support will once again be seen at 1.1160/65, although this does not look likely to be tested again today, but below which could see a run back towards 1.1100 and then towards 1.1080 and 1.1050.

A range trade day seems to lie ahead.

24 Hour: Possible range trade Medium Term: Mildly Bullish
                                          Resistance Support
1.1326 8 Sept high 1.1200 Pivot
1.1300 9 Nov high 1.1167 Session low
1.1268 22 May high 1.1165/60 (23.6% of 1.0838/1.1262)/22 May low
1.1230 Minor 1.1140 Minor
1.1218 Session high 1.1100 (38.2% of 1.0838/1.1262)

Economic data highlights will include:

EU Ascension Day holiday, OPEC Meeting,  Fed’s Bullard Speech, Wholesale Inventories (Apr), Goods Trade Balance, Jobless Claims , Kansas Fed Mfg Activity

USDJPY: 111.51

US$Jpy finally took out 112.00, reaching 112.12, but was unable to hold on to the gains and is ending up at around 111.60 following the release of the FOMC Minutes.

The momentum indicators are mixed on Thursday and a choppy rangebound session within the 111/112 area would not surprise. While the dailies remain rather negative, the 4 hour charts look positive and further short term gains could see another move towards 112.00/10 and then to 112.30, albeit possibly not today, and then to 112.75, which might be a decent sell area if we get there.

On the downside, below the 111.47 session low, minor support will be seen at 111.45/50, a break of which could lead to a run towards 111.00 and then to 110.70 ahead of last Thursday’s low of 110.23.

24 Hour: Range Trade Medium Term: Prefer to sell rallies
                                         Resistance Support
112.77 (61.8% of 114.36/110.23) 111.47/45 Session low/100 HMA
112.55 Minor 111.00 Minor
112.30 (50% of 114.36/110.23) 110.85 23 May low
112.12 Session high 110.70 Minor
111.80 Minor 110.23 17 May low

Economic data highlights will include:

Foreign Bond/Stocks Investment

GBPUSD: 1.2971

Cable traded a choppy range of 1.2926/1.2998 on Wednesday, largely unaffected by the FOMC Minutes but capped at 1.3000 and weighed down by the ongoing Brexit concerns.

The momentum indicators are mixed on Thursday, possibly with a mildly negative tone, and back below the session low would allow a move back to the good band of support between 1.2890/1.2910, below which could return to the distant 16 May low of 1.2865.

Back above 1.3000 would find strong resistance in the 1.3035/45 area, capped by last Thursday’s, 8-month high of 1.3047, but above which could run towards strong offers at 1.3075, and then further out, towards 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.

A neutral stance is required today although I mildly prefer to trade from the short side, looking to sell rallies towards 1.3000, with a SL placed above 1.3050. Watch out for the Provisional Q1 GDP (exp 0.3% qq, 2.1% yy)  figure today.

24 Hour: Neutral – Prefer to sell rallies Medium Term:  Neutral
                                         Resistance           Support
1.3120 Descending trend resistance 1.2952 23 May low
1.3075 (23.6% of 1.7191/1.1821) 1.2935 200 HMA
1.3047 18 May high 1.2914 19 May low
1.3033 23 May high 1.2900 Minor
1.2998 Session high 1.2888 18 May low

Economic data highlights will include:

UK Provisional GDP (Q1), Total Business Investment

USDCHF: 0.9730

US$Chf traded a tight range of 0.9734/76 on Wednesday leaving the outlook unchanged.

The 4 hour charts still look positive, and on the topside, back above the session high would run into offers at 0.9785, above which could see a run back to 0.9800/10. Back above here would then run towards 0.9845, although possibly not today.

The dailies though still point to further medium term weakness, and on the downside, support should be seen at around 0.9715/20 ahead of the previous session low at 0.9701. Back below 0.9700 would then open the way back to the 22 May low and then to 0.9675 and to 0.9600/40 although this looks unlikely to be seen for a while.

Selling rallies towards 0.9800, with a SL placed above 0.9820 could be a plan.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
                                         Resistance Support
0.9845 (38.2% of 1.0100/0.9691) 0.9734 Session low
0.9825 15 May high 0.9715 Rising trend support
0.9804 19 May high 0.9701 23 May low
0.9786 (23.6% of 1.0100/0.9691) 0.9691 22 May low
0.9775 Session high 0.9675 Minor

AUDUSD: 0.7504

The Aud has shrugged off yesterday’s China downgrade by Moody’s, and after initially falling to 0.7442 it is finishing the day at the highs of 0.7505.

Technically, the short term charts look mixed and a cautious stance is required, although the dailies still look constructive, so it may be a session of looking to buy the dips. At the same time, the 4 hour indicators do not suggest at any real upside momentum so we may end up just using 0.7500 as a pivot for the coming session.

On the downside, minor support is seen at 0.7470 and then again at session low of 0.7442, ahead of 0.7400/10 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.

On the topside, minor resistance will be seen at 0.7500 ahead of the 23 May high of 0.7517. Above here would then look for a run towards 0.7540/45 and eventually to 0.7555.

For Thursday, a neutral stance is required, although with the positive look of the dailies, buying dips may be the theme.

24 Hour: Neutral Medium Term: Prefer to buy dips
                                         Resistance                                         Support
0.7545 3 May high 0.7470 Minor
0.7538 (50% of 0.7750/0.7328) 0.7442 Session low
0.7525 Minor 0.7435 22 May low
0.7517 23 May high 0.7407 19 May low
0.7505 Session high 0.7388/84 17 May low/15 May low

NZDUSD: 0.7047

The Kiwi recovered from an early low of 0.6988 and spiked up to a high of 0.7057 following the release of the FOMC Minutes, pretty much where it is closing the day.

Having now taken out the April highs, we could we could see a run towards the March highs at 0.7072 and then 0.7095, above which the 200 DMA lies at 0.7105. Beyond here would then open the way towards the next Fibo levels, seen at 0.7160.

On the downside, 0.7020/30 should act as the initial support today ahead of 0.7000. Below this looks unlikely but the session low of 0.6988 would provide further support.

The Budget is due today, and analysts are painting an upbeat picture based on solid economic growth, which if correct would seem to indicate further upside potential for the Kiwi, as suggested by the daily charts.

24 Hour: Prefer to buy dips Medium Term: Neutral -Cautiously bullish.
                                         Resistance Support
0.7160 (61.8% pivot of 0.7375/0.817) 0.7025 Minor
0.7130 Minor 0.7000 (23.6% of 0.6817/0.7058)
0.7105 200 DMA 0.6988 Session low
0.7090/95 21 Mar high/(50% pivot of 0.7375/0.817) 0.6965 (38.2% of 0.6817/0.7058)
0.7072 22 Mar high 0.6938 (50% pivot of 0.6817/0.7058)

Economic data highlights will include:

Budget Release