As with yesterday, safe haven demand continues to be the over-riding theme, and further gains in the Jpy, Chf and Gold seem likely, while stocks and oil look rather sick heading into Wednesday trade.
The US$ is mixed and, apart from the Jpy and Chf pairs, a choppy session may be the outcome in the absence of any major calendar events. Note that the Kiwi performed well again on Tuesday and has now squeezed 80bp off its lows against the US$, currently at 0.6325, with the RBNZ Interest Rate Decision due later in the Asian session. No cut is generally expected this month following last month’s 50bp cut, but a surprise would see those gains evaporate quickly.
*Trade of the day: September 25, 2019; 7:28 AM(AET)
*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.
All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.
Sell EurUsd @ 1.1045. SL @ 1.1080, TP @ 1.0975
Buy EurUsd @ 1.0980. SL @ 1.0940, TP @ 1.1050
Sell AudUsd @ 0.6825. SL @ 0.6855, TP @ 0.6735
Buy AudUsd @ 0.6765. SL @ 0.6745, TP @ 0.6815
Sell NzdUsd @ 0.6355. SL @ 0.6385, TP @ 0.6250
EurUsd: The Euro has traded a choppy range of 20bp either side of 1.1000 on Tuesday, buffeted by various cross plays and although the short term momentum indicators look slightly positive, a similar session would not surprise for Wednesday. On the downside, 1.0982 was the session low, below which could revisit the Monday low of 1.0965, below which would then allow a move towards 1.0940/50 ahead of the 1.0925/27 double bottom. I don’t really see it down here for a while, but if wrong, below 1.0925 opens the way to 1.0900 and to 1.0860 (76.4% of 1.0340/1.2555), and further out there is a weekly chart gap that would take us to 1.0772. On the topside, the session high was at 1.1025, where we now have a minor double top with the Monday high, and it may struggle to get back above here today. It is not so far away though, so on a topside squeeze, look for a run towards 1.1040/50 and then possibly to the September 18/19 highs at 1.1072/75. Beyond that further resistance would arrive at 1.1100/10 (38.2% of 1.1411/1.0925/), above which would then target 1.1125(61.8% of 1. 1249/1.0925) and the 26 August high of 1.1163. Further out, resistance then lies at 1.1170/75(76.4% of 1. 1249/1.0925/100 DMA) and then at 1.1245 (200 DMA) although that remains some way off. A range trade of 1.1040/1.1080 may well cover it today.
US$Jpy: saw a sharp move lower on the resumption of safe- haven demand during the US session on Tuesday, in reaching 106.95 ahead of a bounce to currently sit at 107.10. . The momentum indicators do look heavy for all risk associates assets, including US$Jpy and we could see a return to the Fibo support seen at the current low (106.92 = 38.2% of 104.43/108.47), below which, steeper losses could take the pair towards106.62 (6 Sept low) and then towards 106.45 (50% pivot of 104.43/108.47). On the topside, the initial resistance lies at 107.30/40 and then again at the session high at 107.78 ahead of 107.87/91 (100 DMA /200 HMA). Back above here looks unlikely now, but if wrong, further gains could see a test of the Wednesday/Thursday highs at around 108.50. Selling into strength with a SL placed above 108.50, or ideally above 108.90 seems to be the plan today.
AudUsd: The Aud$ has squeezed off its 0.6760 lows, but has generally been unimpressive and currently sits at 0.6800, although the currency has been underpinned by the RBA Governor Lowe not being as dovish in high outlook, yesterday evening, as the market though t he might be. The short term momentum indicators are currently mixed/mildly positive although the 4 hour charts look positive and could see a squeeze higher in sympathy with the Kiwi if the RBA leave rates on hold – as expected. The initial resistance sits nearby at 0.6805/10 (Session high/Friday high) ahead of 0.6825 (200 HMA). Beyond there would allow a run towards 0.6850 and possibly to 0.6880 and even to the 12 Sept high of 0.6891 although ahead of next week’s RBA Meeting, when a rate cut is now widely expected I don’t think we get to those levels. On the downside, the 100 HMA is at 0.6985, with further bids likely all the way down to the session low /Fibo support at 0.6765 (61.8% of 0.6687/0.6894) and the trend low of 0.6760. A break would allow a move towards 0.6750 (minor) and then to 0.6735(76.4%). Further out, I still suspect that we may see a return to 0.6700/10 as an RBA rate cut looms, possibly next week, below which would open the way back to 0.6688, where we have a minor double bottom( 3 Sept/26 August lows) and which comes ahead of 0.6675 (7 Aug low). Below 0.6675, there is minor support at 0.6660, but under there would open the way to 0.6500 and, further out, the next major Fibo level is not seen until 0.6250 (76.4% of 0.4773 (April 2001)/1.1082 (July 2011)). Selling rallies towards 0.6830, with a SL at 0.6855 seems to be the plan for Wednesday.
NzdUsd: The Kiwi has enjoyed another positive session in recovering from its new 4 year low of 0.6255, to currently sit at 0.6325 ahead of today’s RBNZ Meeting, at which no cut is generally expected following last month’s 50bp cut. This could provoke further gains and the 4 hour charts do look constructive, so above 0.6330 (200 HMA/38.2% of 0.6450/0.6255)., the initial resistance would then lie at 0.6350 (50%), above which we could see a squeeze back to 0.6375 (61.8%) and then to 0.6400/10. Above here, unlikely in the near term, would allow a move towards 0.6420/25 and on to the trend high of 0.6450 (12 Sept). On the downside, support will be seen at 0.6290/0.6300 and again at 0.6270/75 ahead of the 0.6255 low. A break of this – unlikely today – would then open the way to the next meaningful support, seen at the September 2015 low at 0.6235, which should be strong if/when we get there. Below here though, more distant bids would arrive at the August 2015 low at 0.6125, which could be where we are headed if the RBNZ cut rates, which seems highly likely. Wait for the RBA and go with the flow seems the wisest move right now although overall I still prefer to look for levels to be short.