The US$ looks mostly firmer on the charts heading into the new week and appears set to make headway against the EU majors and the commodity currencies although the Jpy still seems fairly rangebound. The Dollar Index (DXY) does look as though it may be basing out on the daily charts, so selling EurUsd is the preferred trade. The Aud and Kiwi also both look a bit toppish in the daily charts, so selling rallies here may be the plan as well. One thing to note here though, is that the CNY seems set to make some gains against the US$ so this may temper any weakness in the Aud and Nzd.
Stocks are within sight of their all-time high, particularly the S+P which is just 10 points below the July peak.
Elsewhere, things look rather mixed although WTI maybe building further upside momentum, while the ASX also looks healthy.
Risk assets are likely to remain bid until the lead-up to the FOMC on Wednesday, amid hopes of a rate cut, so buying dips may be the general plan. For the same reason, it may be that the US$ trades close to current levels until then as I don’t see it making serious gains ahead of any likely easing by the Fed.
*Trade of the day: October 26, 2019; moved (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 @ 1.1115. SL @ 1.1145, TP @ 1.1065
Buy EurUsd @ 1.1055. SL @ 1.1035, TP @ 1.1120
Sell AudUsd @ 0.6835. SL @ 0.6855, TP @ 0.6780
Buy AudUsd @ 0.6785. SL @ 0.6745, TP @ 0.6825
EurUsd: The Euro is lower at the start of the week, and after a brief rally to 1.1120 on Friday the Euro ended the week at a 10 day low of 1.1080. The short term momentum indicators look heavy and suggest further losses ahead, and below 1.1080 will target 1.1063 (38.2% of 1.0878/1.1179), below which would allow for a run to 1.1028 (50%) and to 1.1000/1.0992 (61.8%). On the topside, resistance will be seen at 1.1100 and at the Friday high of 1.1122 ahead of 1.1132 (100 DMA). Beyond here seems unlikely today but further offers would arrive at 1.1150 and then at the 24 Oct spike high at 1.1162. Further out, back above 1.1180, could then head towards the 61.8% of 1.1411/1.0878//200 DMA at 1.1203, which should see plenty of sellers if/when we get there but currently looks unlikely. The momentum indicators do look heavy on Monday but with a rate cut pretty much written in for Wednesday it is hard to see the dollar making any serious gains, and in the absence of any major data today a rangebound session would not really surprise.
US$Jpy: once again traded a very tight 27 point range on Friday (108.50/77) leaving the outlook pretty much unchanged, with a neutral stance required. The short term momentum indicators are flat and the daily charts look to be turning neutral, but we may yet see some upside progress towards 108.93 (trend high) and on to 109.05 (200 DMA), above which would then open the way to 109.30/35, which will be strong resistance if/when we get there (1 August high, 61.8% of 112.40/104.45). Further out, we may look towards 109.92 (30 May high) and, above 110.00, to 110.50 (76.4%). On the downside, back below 108.45/50, minor support will be seen at 108.25 (21 Oct low), below which would allow for a return to 108.15 (15 Oct low) and to 108.00 (38.2% of 106.48/108.93) and then to 107.87 (23.6% of 104.45/108.93), although this looks unlikely to be seen today. More distant Fibo levels are seen at 107.70 and 107.40. For Monday I remain neutral and suspect that 108.40/95 could well cover it once again.
AudUsd: The Aud$ traded a tight range of 0.6810/35 on Friday and looks slightly heavy heading into the new week, but really needs to break below 0.6800 in order to build momentum. With the short term momentum indicators looking heavy and the dailies appearing to be forming a top, further downside may see a sterner test of 0.6800 (38.2% of 0.6670/6879), below which would then look towards 0.6785 (minor), 0.6775 (50%) and then to 0.6750 (61.8%) and to 0.6720 (76.4%). We really need to see a daily close below 0.6810, where the Daily cloud base lies to add confidence t further downside momentum. On the topside, resistance will again be seen at 0.6735/40 and then again at 0.6755 (100 DMA). If we break above here, doubtful today, we could then see another test of the 22 October high at 0.6882, which is likely to remain strong resistance (0.6876/78 (50% of 0.7081/0.6770/Daily cloud top), but above which could then stretch to the 12 September high at 0.6894 and eventually to 0.6925 (61.8% of 0.7081/0.6770). Use 0.6790/0.6840 as a guide for Friday.
NzdUsd: The Kiwi looks heavy again on Monday. After falling to a low of 0.6348 where it ended the week, below the base of the daily cloud (0.6365 on Friday – 0.6351 today) and with the short term momentum indicators pointing lower, further weakness could now allow a run towards 0.6337 (50% of 0.6240/0.6435), to 0.6315 (61.8%) and to 0.6285 (76.4%) although this seems unlikely for today. On the topside, resistance will be seen at 0.6365 (200 HMA), 0.6285 (minor) and then at 0.6400. Above here, unlikely today, would then target the 23 Oct high at 0.6425, 0.6435 (22 Oct high) and then the 12th Sept high, at 0.6450. Look for 0.6370/0.6320 to cover it today, with a preference to sell rallies.