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

By | April 26, 2018



EURUSD: 1.2165
EurUsd traded lower on Wednesday in falling to 1.2160, finishing on its lows and looking very heavy ahead of today’s ECB Meeting, where a dovish Draghi could help it to lower levels still. With US bond yields on the rise, the dollar seems set to retain its current strength and trading from the long side is still preferred (i.e. short EurUsd)

US Durable Goods Orders come later, following the ECB statement.

1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning lower Weekly Indicators:  Turning lower.
Preferred Strategy:  The 4 hour momentum indicators still look heavy on Thursday although the hourlies are showing a minor degree of bullish divergence, so we may need to do some correctional work to the topside, where 1.2180 will provide some minor resistance ahead of 1.2200 and the initial Fibo level, now at 1.2235. I doubt we see it above here today but if wrong look for a squeeze back towards 1.2250 and further out, to 1.2280/90.

The 4 hour charts look heavy though and as long as we stay under 1.2200/05, we could then head towards 1.2100, below which would target 1.2050/70 and possibly 1.2025 although this remains over the horizon for now.

Sell EurUsd @ 1.2200. SL @ 1.2250, TP @ 1.2085

Resistance Support
1.2280  (38.2% of 1.2475/1.2159) 1.2160 (38.2% of 1.0340/1.2555)/Session low
1.2244 24 April high 1.2154 1 March low
1.2238/34 Session high / (23.6% of 1.2475/1.2159) 1.2125 Minor
1.2205 100 DMA 1.2100 Minor
1.2180 Minor 1.2070 Monthly Tenkan

Economic data highlights will include:                                                             

German Consumer Confidence, ECB Interest Rate Decision/Press Conference, US Goods Trade Balance – Mar, Preliminary Wholesale Inventories – Mar,   Durable Goods Orders –Mar, Kansas Fed Mfg Activity

USDJPY: 109.44
US$Jpy headed up to 109.45 in early Thursday trade, with the dollar firmly underpinned by the rising US Treasury yields, and which seems set to continue.
1 hour/4 hour indicators: Turning higher. Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  As before, the daily and weekly momentum indicators look positive for further gains while the short term charts are becoming a little overbought and we may need some corrective work before the dollar can continue its current run to the topside. The hourlies are hinting at some minor bearish divergence so we may see slightly lower levels today within the overall uptrend.

Technically, a move above the session high of 109.45 would find offers at 109.65 and 110.00 ahead of 110.25, which should be strong if/when we get there. Further out, as we said before, 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 today at 109.00 and at 108.80 ahead of the Monday low of 108.53, although that is a long way off and trading from the long side is again preferred looking for dips towards 109.00/108.80, with a SL placed under 108.50

Buy US$Jpy @ 108.80. SL @ 108.40, TP @ 110.40

Resistance Support
110.50 Minor 109.20 Minor
110.25 200 DMA /(61.8% of 114.73/104.60) 109.00 100 DMA
110.00 Minor 108.78 Session low
109.65 (50% of 114.73/104.60) 108.53 24 April low
109.45 Session high 108.25 Minor

GBPUSD: 1.3932
Cable remained under heavy pressure on Wednesday but it has managed to hang on above Monday’s low of 1.3918. It does look heavy though and the strong dollar is likely to make sure it remains so, with the outcome of the ECB today also likely to drive direction through the cross, which is beginning to look a little heavy, and may provide a little support to Cable.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   The hourlies are showing some minor bullish divergence, and the 4 hour momentum indicators are pointing a little higher, so as long as the 1.3915/25 area holds, we could see a squeeze up to 1.3950/70 ahead of 1.4000 and the Fibo level at 1.4025.although this looks unlikely to be seen again for a while.

On the downside, 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 1.3868/60 (76.4% of 1.3710/1.4376)/100 DMA .

I remain neutral on GbpUsd but think selling EurGbp may be a trade given the longer term series of lower highs/lows.

Resistance Support
1.4030/25 23 April high /(23.6% of 1.4376/1.3925) 1.3922 Session low
1.4000 Minor 1.3913/18 19 Mar low/24 April low
1.3996 Session high 1.3890 16 Mar low
1.3975 Minor 1.3868 (76.4% of 1.3710/1.4376)
1.3950 Minor 1.3860 100 DMA

Economic data highlights will include:

CBI Distributive Trade Survey – Realised

USDCHF: 0.9830
US$Chf had another squeeze higher on Wednesday as it moved up from 0.9780 to 0.9850, closing near the highs. EurChf had another run at 1.2000, which has so far failed but keeps the Chf under some pressure both in the cross and against the US$.
1 hour/4 hour indicators: Mixed. Daily Indicators: Up Weekly Indicators:   Up
Preferred Strategy:  The longer 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 0.0.9800 and at 0.9780 ahead of 0.9765, 0.9735 and last Friday’s low of 0.9705, and buying dips is still preferred.

On the topside, the longer term momentum indicators are now pointing higher, and beyond 0.9845/50 could see a run towards 0.9900/15 and then to 0.9975/1.0000 albeit not today.

Given the look of the short term momentum indicators, either hang on to current long positions or look to buy dips toward 0.9790/0.9800.

Buy US$Chf @ 0.9790. SL @ 0.9740, TP @ 0.9900

Resistance Support
0.9915 26 Dec high 0.9800 Minor
0.9900 Minor 0.9780 100 DMA /Session low
0.9870 Minor 0.9767 24 April low
0.9845/47 10 Jan high/Session high 0.9736 23 April low
0.9835 (76.4% of 1.0038/0.9187) 0.9705 Friday low

AUDUSD: 0.7565
The Aud had another tough day on Wednesday, in falling to a low of 0.7551, before a dead-cat bounce to 0.7560 where it has closed the day, Having now broken below the long term rising trend line support, commencing in Jan 2106, the path looks increasingly on the downside, with strong US bond yields likely to keep the pressure on the Aud.
1 hour/4 hour indicators: Mixed. –Mixed. Daily Indicators: Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   The Aud remains very heavy in trading down to 0.7551 on Wednesday  and would seem to have further losses to come, where the initial support will be at the Fibo levels at 0.7520/30 and then at the early December low of 0.7501. Under here would open the way to much lower levels, with little support seen ahead of the 1 June 2017 low at 0.7371.

On the topside, resistance will be seen at 0.7580 and at the session high of 0.7605. Further out, above 0.7620 would allow a return to 0.7640/50 although this looks rather doubtful to be seen again for a while.

Selling rallies is preferred.

Sell AudUsd @ 0.7600. SL @ 0.7645, TP @ 0.7510

Resistance Support
0.7640 100 WMA 0.7551 Session low
0.7620 24 April high 0.7530 (61.8% of 0.7160/0.8135)
0.7612 (23.6% of 0.7813/0.7551) 0.7519 (76.4% of 0.7328/0.8135)
0.7605 Session high 0.7501 8 Dec low
0.7580 Minor 0.7470 Minor

Economic data highlights will include:

Import/Export Index

NZDUSD: 0.7064
 The Kiwi, as with the Aud, has had another tough day in falling from 0.7118 to a low of 0.7056 in making a new 2018 low, breaking the 5 month uptrend support in the process.
1 hour/4 hour indicators: Mixed Daily Indicators:  Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   The hourly/4 hourly momentum indicators look to be trying to form a short term  base for the Kiwi  but with the daily momentum indicators pointing lower  I think we are going to see lower levels ahead. If so, a break of 0.7050 could see an acceleration towards 0.7030 and then to 0.7000, below which there is not much to hold the Kiwi up ahead of 0.6935 (76.4% of 0.6780/0.7438) and then to 0.6915, long term rising trend support, which is where I think we are eventually heading.

On the other hand, if the hourlies can produce a topside squeeze, the Kiwi could head back to 0.7080 and possibly to 0.7100, which would seem to be a decent level to sell the pair. If wrong, beyond that, would allow for a return to the session high at 0.7120 and then 0.7135, but this seems unlikely for a while.

Sell NzdUsd @ 0.7100. SL @ 0.7140, TP @ 0.7000

Resistance Support
0.7137 (23.6% of 0.7395/0.7056) 0.7056 Session low
0.7125 Minor 0.7030 (61.8% of 0.6780/0.7438)
0.7119 Session high 0.7015 Minor
0.7100 Minor 0.7000 Minor
0.7080 Minor 0.6953 20 Dec low