27 July: Forecast: FX: US$/Majors

By | July 27, 2017


EURUSD: 1.1743
24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
The dollar is weaker on all fronts following the FOMC outcome, with the Euro reaching levels last seen in January 2015 (1.1739).

We are now heading into strong resistance within the band of 1.1735/1.1790 although the momentum indicators do suggest that we are likely to see further tests of the topside. A break of 1.1800 could 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 1.1700/15, ahead of the May 2016 high/pivot of 1.1616 which has successfully underpinned the Euro in recent sessions. A downside break of 1.1600 could then see a run back towards 1.1560/80 and possibly to 1.1500.

Preferred Strategy: A cautious stance is required, but we are running out of resistance levels ahead of 1.2000 and buying dips towards 1.1650 with a SL placed under 1.1600 would seem to be the plan.

Resistance Support
1.1975 Minor 1.1700 Minor
1.1870 Minor 1.1650 Minor
1.1790 200 WMA 1.1612 Session low
1.1770 Minor 1.1590 (23.6% of 1.1118/1.1739)
1.1735/40 (38.2% of 1.3993/1.0340)/Session high 1.1550 200 HMA

Economic data highlights will include:

T: German Consumer Confidence, Chicago Fed National Activity Index, Wholesale Inventories (Jun), Durable Goods (June), Kansas Fed Mfg Activity (Jul),

USDJPY: 111.10
24 Hour: Neutral Medium Term: Neutral
US$Jpy took out some strong resistance levels in trading up to 112.19 ahead of the Fed, but then fell hard, reaching a low of 111.05 before closing the day at 111.25.

The dollar now looks heavy, and a downside break of 111.00 would allow a return to the previous session low of 110.82, the trend support at 110.75 and then towards 110.55/65 and possibly to 110.15.

On the topside, minor resistance will be seen at 111.45 and then again at 111.85. 112.00 looks unlikely to be revisited today but if wrong, we could see a return to 112.20.

Preferred Strategy: Neutral

Resistance Support
112.19 Session high 111.10/05 200 WMA /Session low
111.95/112.00 100 WMA /200 DMA 110.75 Rising trend support
111.85 200 HMA 110.64/62 16 June low/24 July low
111.70 Minor 110.55 (61.8% of 108.12/114.50)
111.45 100 HMA 110.30 Minor

GBPUSD: 1.3119
24 Hour: Prefer to buy dips Medium Term: Neutral
Sterling has headed higher following the Fed decision and it has run into the good resistance at 1.3115/25, which may continue to cap it for a while, but above which there is little to stop it 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.

On the downside, minor support lies at 1.3080 and 1.3030 ahead of 1.3000. Below Monday’s low of 1.2983, unlikely for a while I suspect, 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.

Preferred Strategy: I prefer to buy dips, looking for a break of 1.3125, but with a SL placed below 1.2980.

Resistance Support
1.3280 15 Sept 2016 high 1.3080 Minor
1.3250 Minor 1.3030 Minor
1.3200 Minor 1.2998 Session low
1.3160 Minor 1.2983 24 July low
1.3125/20 18 July high/Session high 1.2952 21 July low

Economic data highlights will include:

T:  CBI Distributive Trade Survey – Realised

USDCHF: 0.9503
24 Hour: Neutral Medium Term: Mildly Bearish
Although the Euro has headed to new multi year highs, US$Chf currently remains comfortably above the recent 0.9440 lows, and further choppy trade would appear to be in store. The momentum indicators are now mixed and a neutral stance is favoured although the weekly momentum indicators do hint that eventually the dollar is headed lower.

On the topside, the 200 WMA at 0.9555 will again provide a hurdle, a break of which would then allow a run back towards the session high at 0.9594 and possibly higher, towards last week’s high at 0.9620.

The dailies look less certain today about any renewed dollar strength, and if we turn lower again we could head back below 0.9500  (session low: 0.9498) 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.

Preferred Strategy: Neutral

Resistance Support
0.9635 18 July high 0.9498 Session low
0.9620 20 July high 0.9455 Minor
0.9594 (23.6% of 1.0099/0.9437) /Session high 0.9446/42/37 Session low/3 May 2016 low/21 July low
0.9555 200 WMA 0.9400 Minor
0.9535 200 HMA 0.9360 Minor

AUDUSD: 0.8004
24 Hour: Neutral Medium Term: Neutral – Possibly look to buy dips.
Having seen a low of 0.7877 in early European trade, the Aud has shot up to a high of 0.8013 following the FOMC meeting, closing at 0.8000.

The short term momentum indicators suggest that a cautious stance is warranted at these levels although the longer term charts still hint that buying dips remains the medium term plan. The weekly charts suggest that at some stage we are in for a stronger test of the topside although the 200 WMA is currently providing strong resistance. A monthly close (Monday) above the 100 MMA (0.7975) would reinforce that view, and once above 0.8015 there is little to stop the Aud from heading to 0.8160.

On the downside, the 100 MMA may act as a near term magnate, below which there is minor support 0.7940 and again at 0.7900, ahead of the minor double bottom at 0.7875.

Preferred Strategy: Looking to buy dips towards 0.7900/50 seems to be the plan, with a SL placed below 0.7875.

Resistance Support
0.8162 May 2015 high 0.7975 100 MMA
0.8100 Minor 0.7940 Minor
0.8080 Minor 0.7900 Minor
0.8050 Minor 0.7874 21 July low /Session low
0.8015/13 200 WMA/Session high 0.7830 (23.6% of 0.7328/0.8013)

Economic data highlights will include:

Import Export Index (Q2)

NZDUSD: 0.7517
24 Hour: Neutral Medium Term: Prefer to buy dips
The Kiwi has shot up to 0.7528 following the FOMC, taking out some decent resistance levels along the way and is closing above 0.7500, last seen in April 2015.

As with the Aud, although the short term momentum indicators are a little mixed the daily and weekly charts suggest that further gains look likely, and there is now there is little resistance  to stop the Kiwi heading on towards 0.7545, 0.7575 and possibly even to 0.7740/45 (April 2015 high).

The downside will find support, below 0.7500, at 0.7485 and then again at 7455, at 0.8430 and at 0.7400 below which could then head towards 0.7370, which looks way over the horizon.

Preferred Strategy: Neutral – Buying dips looks to be the plan although at these levels I prefer to remain neutral.

Resistance Support
0.7600 Minor 0.7500 Minor
0.7575 May 2015 high 0.7485 Minor
0.7560 Minor 0.7455 Minor
0.7545 100 MMA/55 MMA 0.7430 100 HMA
0.7528 Session high 0.7400 25 July low