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

By | October 25, 2017

 

EURUSD: 1.1762
Preferred Strategy:   EurUsd has had a choppy session, well underpinned at around 1.1740, and briefly shooting up to 1.1790, but closing in the middle of the range and leaving the outlook unchanged. The IFO and the US Durable Goods Orders will be the main events today, along with the usual headlines coming from the White House although it would seem that traders will likely wait for Thursday’s ECB Meeting for any real 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 there is little change. The major Head/Shoulder formation still seems to be under construction, with the neckline at 1.1880.  This level roughly ties in with the major descending trend resistance (1.1860) and should see good selling interest if we get there. The dailies are pretty flat, as are the 4 hour momentum indicators, and support remains at 1.1740 below which further good support lies at 1.1720/30. Under here, we could then test 1.1700 and the stronger level at 1.1660/70 although probably not today. On the topside, offers will arrive at the session high (1.1792), at 1.1800/05 and then at 1.1825 although I am not sure that we manage to get up there again in the short term. In the bigger picture, as long as we stay under 1.1880 I am happy to stay short Euros, with the need to keep a tight SL in place above 1.1910. The H/S objective is at around 1.1250. Sell EurUsd @ 1.1810. SL @ 1.1890, TP @ 1.1700.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
Resistance Support
1.1880 H/S Neckline 1.1742 Session low
1.1857 20 Oct high/Descending trend resistance 1.1725 23 Oct /Daily cloud base
1.1825 (76.4% of 1.1857/1.1725) 1.1720 (76.4% of 1.1668/1.1880)
1.1805 (61.8% of 1.1857/1.1725) 1.1700 Minor
1.1792 Session high/200 HMA 1.1661 17 Aug low/100 DMA

Economic data highlights will include:

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



USDJPY: 113.92
Preferred Strategy: US$Jpy remains choppy within the 113/114 area but at the end of the day seems underpinned by rising US yields, while at the same time capped by 114 option expiries. More of the same looks likely today as traders wait on Thursday’s US House Budget vote, but overall the dollar remains underpinned and will closely follow the US treasuries market while also paying attention to the ECB and the situation in Spain, which could provoke some safe haven demand if the situation escalates.

With both the 1 & 4 hour charts looking rather uninspired, further choppy action looks possible although the dailies are picking up a more positive tone, and on the topside resistance will be seen at the recent high of 114.09, above which there is not too much to stop the dollar heading towards 114.50 and beyond that, to the major descending trend resistance, currently at 115.05. On the downside, minor support will arrive at 113.50 and again at the session low at 113.24 although this currently looks a little unlikely to be seen. If wrong, a test of 113.00 could be on the cards, below which would see us back in the previous 112/113 range. Minor support should arrive at 113.20/00 below which 112.80 and Friday’s low of 112.50 should provide decent backup. Overall, with the daily momentum indicators look mildly positive, buying dips still seems to be the plan. Buy US$Jpy @ 113.30. SL @ 112.95, TP @ 114.40.

24 Hour: Neutral Medium Term: Prefer to buy dips
                                         Resistance Support
115.05 Descending trend resistance 113.50 Minor
114.49 11 July high 113.24 Session low
114.20 Minor 113.00 Minor
114.09 23 Oct high 112.80 Minor
114.01 Session high 112.50 20 Oct low /Rising trend support


GBPUSD: 1.3134
Preferred Strategy: Cable was heavy throughout the session as doubts grow as to whether the BOE will hike rates next week, with good selling interest into the London fix also not helping matters. Still looking heavy into the NY close, a break of the session low would see a run to 1.3100, 1.3085 and then possibly to the 100 DMA and the rising trend support at 1.3025. On the topside, minor resistance will be seen at 1.3150 and 1.3175 ahead of 1.3200+ although it currently looks unlikely to get back up here today unless the UK Q3 GDP beats expectations (+0.3%mm, 1.4%yy). Right now a neutral stance seems prudent.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
1.3286 17 Oct high 1.3113 Session low
1.3226 Session high/Descending trend resistance 1.3087 20 Oct low
1.3200 Minor 1.3050 100 DMA
1.3175 Minor 1.3025 Rising trend support
1.3150 Minor 1.2995 (61.8% of 1.2587/1.3656)

Economic data highlights will include:

W: UK Q3 GDP



USDCHF: 0.9908
Preferred Strategy:  US$Chf took little notice of what was happening elsewhere and has headed to new trend highs of 0.9910 and looks as though it is going to take a look at 1.0000+ although it has to overcome Fibo resistance at 0.9940 first. On the downside, support will be seen at 0.9880 and then again at around 0.9840.  Staying long and buying dips is still preferred. Buy US$Chf @ 0.9880. SL @ 0.9830, TP @ 0.9990.
24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
Resistance Support
0.9990 (61.8% of 1.0343/0.9420) 0.9880 Minor
0.9965 Minor 0.9837 Session low/100 WMA
0.9940 (76.4% of 1.0099/0.9420) 0.9815 200 DMA
0.9925 Minor 0.9785 Minor
0.9910 Session high 0.9765 Rising trend support


AUDUSD: 0.7776
Preferred Strategy:   The Aud took a beating in early Europe, falling to 0.7770 before chopping around nearby during the US session and will now take its direction from the CPI (exp 0.8% mm, 2.0% yy, Trimmed Mean 0.5% mm, 2.0% yy).

The 4 hour charts are heavy and the dailies are both pointing lower and a sterner test of the support at 0.7770 and seems imminent, below which would  target 0.7745 and then the early October low at 0.7732. Under there, targets will be 0.7725 and 0.7700.On the topside, resistance will be seen at 0.7800 and again at 0.7820, above which could squeeze towards the 23 October high at 0.7833 although this looks rather doubtful.  Wait for the CPI but the preference is to be small short heading into the number.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
Resistance Support
0.7855 Minor 0.7770 11 Oct low /Session low
0.7833 23 Oct high 0.7745 Minor
0.7824 Session high/100 DMA 0.7732  6 Oct low
0.7800 Minor 0.7725 (50% pivot of 0.7328/0.8124)
0.7785 Minor 0.7692 200 DMA

Economic data highlights will include:

W:  Australian CPI (Q3)



NZDUSD: 0.6903
Preferred Strategy:   Having squeezed back up to 0.7003 in early trade yesterday, the Kiwi has since made new trend lows on Tuesday, at 0.6885, with pressure coming from higher US yields.  The dailies remain negative and as before, trading from the short side and selling rallies seems to be the plan. On the downside, a move back below 0.6885 would target 0.6850 and eventually the 0.6817 May 2017 low.
24 Hour: Prefer to sell rallies Medium Term: Bearish
Resistance Support
0.7009 (38.2% of 0.7210/0.6885) 0.6885 Session low
0.7003 Session high 0.6840 (50% pivot of 0.6125/0.7557)
0.6960 (23.6% of 0.7210/0.6885) 0.6835 Minor
0.6930 Minor 0.6817 11 May low
0.6915 Minor 0.6800 Minor