26 July: Forecast: FX: US$/Majors

By | July 26, 2017


EURUSD: 1.1646
24 Hour: Neutral. Range trade Medium Term: Neutral
Preferred Strategy: Neutral

EurUsd is unchanged today, but not before a brief test of the topside to take out 1.1700, to see a brief test of the August 2015 spike high of 1.1713, in reaching 1.1711 although the Euro did not stay there long and is finishing mid range at 1.1645.

A move above 1.1713 would find strong resistance in the 1.1735/1.1800 area although this remains some way off at this stage unless the FOMC changes tack and comes up with a dovish statement today. A break of 1.1800 could then mean that we on our way to 1.2000 and potentially to 1.2150 although I am not sure who would want to be buying the Euro at such dizzy levels.

On the downside, near term support arrives at 1.1630 ahead of the May 2016 high/pivot of 1.1616. A downside break of 1.1600 could then see a run back towards 1.1560/80 and possibly to 1.1500. Further out, last Thursday’s low was at 1.1478 and if/when we break under this we could then see a return to Monday’s low of 1.1435.

I don’t think we should expect too much from today’s FOMC outcome and a choppy but sideways session may be in store while waiting on Friday’s Q2 US GDP outcome.

Resistance Support
1.1800 200 WMA 1.1624 24 July low
1.1775 Minor 1.1615 21 July low/Previous high (3 May 2016)
1.1735 (38.2% of 1.3993/1.0340) 1.1585 Minor
1.1713/11 23 Aug 2015 high/Session high 1.1570 (23.6% of 1.1118/1.1711)
1.1680 Minor 1.1550 200 HMA

Economic data highlights will include:

W: US New Home Sales (Jun), EIA weekly crude oil stock change, FOMC Meeting/Interest Rate Decision/Statement


USDJPY: 111.86
24 Hour: Mildly Bullish Medium Term: Neutral
Preferred Strategy: Mildly Bullish

US$Jpy has rallied on Tuesday, in line with firmer US treasury yields, and is finishing at session highs following an earlier dip to a low of 110.82.

We are currently sitting right up against strong resistance at 111.95, but with the short term momentum indicators looking positive; a break of 112.00/10 could bring about a quick rally towards 112.40 and possibly back towards 112.85/113.00.

Support now lies at 111.65 and then again at 111.10 although this looks unlikely to be seen ahead of the FOMC.  If wrong, a sustained downside break of 111.00 would allow a return to the session low of 110.82 and then towards 110.55/65 and possibly to 110.15.

Resistance Support
112.86 17 July high 111.65 100 DMA
112.55 (50% of 114.50/110.62) 111.35 Minor
112.41 20 July high 111.10 200 WMA
112.10 (38.2% of 114.50/110.62)/Daily Tenkan 110.80 Minor
111.93/95 Session high/200 DMA /100 WMA 110.64/62 16 June low/24 July low

Economic data highlights will include:

W:  BOJ Nakaso Speech

GBPUSD: 1.3029
24 Hour: Neutral Medium Term: Neutral
Preferred Strategy: Neutral – Choppy 1.30/1.31.

Although Cable briefly tripped stops above 1.3060 on Tuesday, it has mostly had a rangebound session (1.3006/1.3083) leaving the outlook unchanged

The momentum indicators are a mixed/flat again on Wednesday and a cautious stance is required while we remain within the recent choppy range, which looks set to continue to contain the price action although the UK Q2 GDP may create a directional move. The momentum indicators are not telling us much either way.

On the downside, below Monday’s low of 1.2983 could then see a return to last week’s low of 1.2933 which would find added support at the Fibo level at 1.2920. Below this, unlikely today, could then see a move towards 1.2850 (38.2% of 1.2589/1.3125) although this remains some way off.

On the topside, back above the today’s high of 1.3083 could then head to 1.3100 and into the good resistance at  1.3115/25, but above which there is little to stop Cable heading on towards 1.3200 and then to 1.3280. Above there would be increasingly bullish, possibly opening up the major Fibo pivot at 1.3420 (50% pivot of 1.5017/1.1821) although this currently remains over the horizon.

Resistance Support
1.3125 18 July high 1.3006 Session low
1.3100 Minor 1.2983 24 July low
1.3083 Session high 1.2952 21 July low
1.3065 Minor 1.2932 20 July low
1.3050 Minor 1.2920 (38.2% of 1.2589/1.3125)

Economic data highlights will include:

W: UK Provisional Q2 GDP

USDCHF: 0.9523
24 Hour: Neutral Medium Term: Mildly Bearish
Preferred Strategy: Prefer to buy dips, with a SL placed under 0.9435.

US$Chf held on to the 0.9440 support on Wednesday and it has squeezed back above 0.9500 to finish at the highs of 0.9525.

The momentum indicators are now generally turning slightly higher and buying dips is slightly favoured. On the topside, above the session high would run into the 200 WMA at 0.9550 and this would provide a formidable hurdle. A break above here would then allow a run back towards 0.9600 and possibly higher, towards last week’s high at 0.9620.

The dailies look less certain about any sustained move higher, and if we fail to make any progress we could head back below 0.9500 and back to the strong level at 0.9435/45 below which there is little support to be seen until 0.9330, and below that, not much again until 0.9260.

Resistance Support
0.9635 18 July high 0.9500 100 HMA
0.9620 20 July high 0.9455 Minor
0.9593 (23.6% of 1.0099/0.9437) 0.9446/42/37 Session low/3 May 2016 low/21 July low
0.9555 200 WMA 0.9400 Minor
0.9522 21 July high /Session high 0.9360 Minor

AUDUSD: 0.7936
24 Hour: Neutral   -Prefer to sell rallies? Medium Term: Neutral – Possibly look to buy dips.
Preferred Strategy: Neutral wait for the CPI – possibly sell rallies.

The Aud squeezed up to 0.7969 on Tuesday but the gains faded once the US$ regained its footing and the Aud has finished pretty much in the middle of the day’s range. We now await the CPI (exp 0.4% mm, 2.2% yy) and a speech from the RBA Governor Lowe, who may take another opportunity to talk the Aud lower.

The momentum indicators look mixed again on Wednesday and a cautious stance is warranted although the longer term charts still hint that buying dips remains the medium term plan, with the weeklies particularly suggesting that at some stage we are in for a test of 0.8000+.

The short term momentum indicators look less positive and if we do head lower today, below 0.7900, the initial support will arrive at 21 July’s low of 0.7874, ahead of the chance of a drop to 0.7830 although this looks unlikely at this stage.

On the topside, the initial resistance will be seen at 0.7965/70, above which could see a move back to the 0.7988 trend high. Above here could then see a run towards 0.8000 and then to 0.8015 although I don’t think we are going there today unless the CPI easily beats expectations.

Resistance Support
0.8015 200 WMA 0.7902 24 July low/Session low
0.7987 20 July high 0.7874 21 July low
0.7975 200 MMA 0.7850 Minor
0.7969 Session high 0.7830 (23.6% of 0.7328/0.7987)
0.7935 100 HMA 0.7800 Minor

Economic data highlights will include:


NZDUSD: 0.7418
24 Hour: Prefer to sell rallies Medium Term: Neutral
Preferred Strategy: I mildly prefer to trade from the short side today, with a tight SL placed above 0.7460.

The Kiwi has finished the session towards the lower end of the days 0.7400/50 range and we now await the June Trade Balance (exp +150 mio).

There is little change to the technical picture and the longer term momentum indicators remain positive. If we can overcome the resistance seen at 0.7450/55 further gains look possible although 0.7485 will be a formidable hurdle if we get there. Beyond here though there is little to stop the Kiwi heading on towards 0.7550 and possibly even to 0.7740/45 (April 2015 high).

The downside has good support at 0.7400 below which could then head towards 0.7370. Under there could see a return towards 0.7335 although this seems unlikely today.

Resistance Support
0.7545 100 MMA 0.7400 Session low
0.7520 55 MMA 0.7390 Minor
0.7500 Minor 0.7370 200 HMA
0.7485 7 Sept high/ (50% pivot of 0.8835/0.6125) 0.7335 Minor
0.7455 21 July high /24 July high 0.7306 (23.6% of 0.6815/0.7458)

Economic data highlights will include:

W: Trade Balance (Jun)