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

By | April 27, 2018


EURUSD: 1.2104
Having left rates unchanged, the Euro rallied to 1.2210 when Draghi was not as dovish as hoped and produced some short covering but that was as good as it got, and it then turned lower, helped by talk of some month end dollar demand and softer German rates.  The pair is now ending on its lows at 1.2100, with the techs looking heavy for further losses to come.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning lower Weekly Indicators:  Turning lower.
Preferred Strategy:  The momentum indicators all look heavy again on Friday although US bond yields look a little softer today, so we may need to do some correctional work to the topside, where 1.2130 and 1.216 will provide some minor resistance ahead of the initial Fibo level at 1.2185 and then a return to 1.2200/10 I doubt we see it above here today but if wrong look for a squeeze back towards 1.2240.

The 4 hour charts look heavy though, and as long as we stay under 1.2160/80 we could then head below 1.2100, which would target 1.2085 (minor) and then to 1.2050, which should see decent buyers but below which will open the way to 1.2030, also strong, and to 1.2000.

Sell EurUsd @ 1.2140. SL @ 1.2210, TP @ 1.2030


Resistance Support
1.2240 (38.2% of 1.2475/1.2095) 1.2095 Session low
1.2205/09 100 DMA /25 Apr high 1.2085 Minor
1.2185 (23.6% of 1.2475/1.2095) 1.2050 (38.2% of 1.0340/1.2555) /Monthly Tankan
1.2155 Minor 1.2030 (23.6% of 1.0340/1.2555)
1.2130 Minor 1.2000 Minor

Economic data highlights will include:                                                             

Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, Consumer Confidence US Preliminary Q1 GDP, US Personal Consumption/Expenditure, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count

USDJPY: 109.31
US$Jpy was pretty much unaffected by the action in the European majors and traded a tight range of 109.06/46, leaving the medium term outlook unchanged. A nimble stance will be required today though with the domestic CPI, Retail Trade, Industrial Production, and Jobs data all coming up ahead of the BOJ Meeting. No changes are expected although the statement may see some choppy trade.
1 hour/4 hour indicators: Turning lower 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 appear to be turning a little lower, so we may need some corrective work before the dollar can continue its current run to the topside.

If so,  on the downside, buyers will be seen today at 109.00/05, which should be reasonable support, and then 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

A move above the current trend 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.

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

Resistance Support
110.50 Minor 109.06 Session low
110.25 200 DMA /(61.8% of 114.73/104.60) 109.00 100 DMA
110.00 Minor 108.78 25 Apr low
109.65 (50% of 114.73/104.60) 108.53 24 April low
109.45 25 Apr high /Session high 108.25 Minor

Economic data highlights will include:

Tokyo CPI, Industrial Production, Retail Sales, BOJ Meeting/Interest Rate Decision/Statement/Outlook

GBPUSD: 1.3915
Cable once again remained under pressure on Thursday, partly dragged down by the softer Euro,  but it has managed to hang on above 1.3900 at the end of the session after having traded down to 1.3895 in Europe. It does look heavy though and the strong dollar is likely to make sure it remains so, so selling rallies is preferred.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:   The hourlies look a little heavy but the 4 hour momentum indicators are pointing a little higher, so as long as the 1.3900/1.3895 area holds, we could see a squeeze back towards 1.3940/50 and possibly up to 1.3950/70 ahead of 1.3995/1.4000, which capped it today. Above there could head towards 1.4025/30 although this looks unlikely to be seen again for a while.

On the downside, a break of the mid-March lows at 1.3890 would target 1.3868/60 (76.4% of 1.3710/1.4376)/100 DMA, below which there is not too much to stop a run to 1.3800 and to 1.3770.

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

The Q1 GDP will be released today (exp 0.4%qq, 1.4%yy) and will be closely watched for any guidance as to the chances of a May BOE rate hike.

Resistance Support
1.4030/25 23 April high /(23.6% of 1.4376/1.3925) 1.3890/95 16 Mar low/Session low
1.4000 Minor 1.3868 (76.4% of 1.3710/1.4376)
1.3996 25 Apr high 1.3860 100 DMA
1.3975 Minor 1.3840 12 Mar low
1.3950 Minor 1.3770 (23.6% of 1.1821/1.4376)

Economic data highlights will include:

Consumer Confidence, Preliminary Q1 GDP

USDCHF: 0.9894
US$Chf had another squeeze higher on Thursday as it moved up from an ECB inspired dip to 0.9815 to reach 0.9895, closing near the highs.
1 hour/4 hour indicators: Mixed. Daily Indicators: Up Weekly Indicators:   Up
Preferred Strategy:  The momentum indicators still look positive for further gains and there is no change to the view of trading from the long side although strong Fibo resistance at 0.9900 may provide a hurdle that requires some consolidation and possibly a minor correction lower. If sl. minor support will arrive at 0.9845/50 and at 0.9815 ahead of 0.9800, 0.9780. Buying dips is still preferred.

On the topside, the longer term momentum indicators are pointing higher, and beyond 0.9900 could see a run towards 0.9915 and then to 0.9935 and on to 0.9975/1.0000 albeit probably not today.

Given the look of the short term momentum indicators, either hang on to current long positions or look to buy dips toward 0.9850/0.9815.

The SNB’s Jordan will be speaking today.

Buy US$Chf @ 0.9850. SL @ 0.9795, TP @ 0.9935

Resistance Support
0.9977 8 Dec high 0.9875 Minor
0.9934 15 Dec high 0.9840 Minor
0.9915 26 Dec high 0.9815 Session low
0.9900 (61.8% of 1.0037/0.186) 0.9780 100 DMA /25 Apr low
0.9895 Session high 0.9767 24 April low

AUDUSD: 0.7554
The Aud was choppy but remained heavy on Thursday, in falling to a low of 0.7546, before a dead-cat bounce, to 0.7555, to finish the day pretty much unchanged. As before, having now broken below the long-term rising trend line support, commencing in Jan 2106, the path looks increasingly towards 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 heavy, in trading down to 0.7546 on Thursday , 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 the session high of 0.7588, if we get there, and at the 25 Apr 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 @ 0.7585. SL @ 0.7615, TP @ 0.7480

Resistance Support
0.7620 24 April high 0.7546 Session low
0.7610 (23.6% of 0.7813/0.7546) 0.7530 (61.8% of 0.7160/0.8135)
0.7605 25 Apr high 0.7519 (76.4% of 0.7328/0.8135)
0.7588 Session high 0.7501 8 Dec low
0.7565 Minor 0.7470 Minor

NZDUSD: 0.7059
 The Kiwi, as with the Aud, has had another tough day in trading at 2018 lows of 0.7056 but managing to close pretty much where it opened the session. Trade Balance coming up.
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 the support seen at 0.7055/50 could see an acceleration towards 0.7030 and then to 0.7000. Below 0.7000 there is not much to hold the Kiwi up ahead of 0.6935 (76.4% of 0.6780/0.7438) and then 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 the Thursday high of 0.7095, which would seem to be a decent level to sell the pair. If wrong, beyond that, would allow for a return to the 25 Apr high at 0.7120 and then 0.7135, but this seems unlikely for a while.

Sell NzdUsd @ 0.7085. SL @ 0.7125, TP @ 0.6980

Resistance Support
0.7137 (23.6% of 0.7395/0.7056) 0.7056 25 Apr low /Session low
0.7125 Minor 0.7030 (61.8% of 0.6780/0.7438)
0.7119 25 Apr high 0.7015 Minor
0.7094 Session high 0.7000 Minor
0.7075 Minor 0.6953 20 Dec low

Economic data highlights will include:                                                                                        

Trade Balance