29 Jan: Forecast: FX: US$/Majors + trade ideas

By | January 29, 2018



EURUSD: 1.2428
EurUsd was choppy on Friday, mainly pushed around by politicians (Mnuchin/Trump/Kuroda) comments, less so by the data which saw a US Q4 GDP miss expectation(2.6% vs exp 3.0% annualised) but  offset by a strong Durable Goods Orders (2.9% mm v exp 0.8%). At the end of the day the pair finished at around the midpoint of the 1.2370/1.2493 range, but with the short term momentum indicators looking heavy a dip back towards the lows looks possible for Monday.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  With the short term momentum indicators pointing lower, a run back towards 1.2370 would seem possible, below which there is Fibo support at 1.2310. With the daily/weekly charts looking positive though, any weakness may be short lived and buying dips for the medium term trade would seem to be a plan. Above Friday’s high would then target 1.2538, beyond which would open 1.2650, albeit not today. In the meantime, the 100 MMA/200 MMA may provide stiff resistance, possibly until Wednesday’s FOMC Meeting.

Sell EurUsd @ 1.2460. SL @ 1.2505, TP @ 1.2325

Buy EurUsd @ 1.2320. SL @ 1.2270, TP @ 1.2450

Resistance Support
1.2537 25 Jan high 1.2369 Friday low
1.2500 (38.2% of 1.6037/1.0340) 1.2350 Minor
1.2493 Friday high 1.2325 Minor
1.2460 100 MMA 1.2305 (23.6% of 1.1553/1.2537)
1.2425 200 MMA 1.2270 Minor

Economic data highlights will include:

M: US Personal Consumption/Expenditure Price Index, Dallas Fed Mfg Business Climate

T:  German CPI/HICP, EU Preliminary Q4 GDP, Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Case Shiller House Price Index, API Weekly Crude Oil Stock Inventory

W:  Donald Trump Speech, German Retail Sales, Unemployment, EU Unemployment, CPI, Chicago Purchasing Managers Index, Pending Home Sales, FOMC Meeting/Interest Rate Decision.

T: EU Manufacturing PMIs, US Jobless Claims, ISM Mfg PMI/Prices Paid, Construction Spending, Total Vehicle Sales

F: EU PPI, Jobs/NFP/Average Hourly Earnings data, Michigan Consumer Sentiment Index, Factory Orders, Baker Hughes Oil Rig Count

USDJPY: 108.63
US$Jpy fell heavily again on Friday, with the Jpy underpinned by Kuroda’s hawkish comments on the Japanese economy, hinting at a normalisation of Monetary Policy. The pair was volatile, trading a 109.77/108.27 range but closing near the lows and looking very heavy at the start of the week
1 hour/4 hour indicators: Mixed – Turning lower Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  The momentum indicators are generally pointing lower and it would seem to be the downside that will come under pressure early in the coming week. If so, there will support at Friday’s lows, but a break of which would then find little to hold the dollar up until rising trend support  at 107.50 and the 2017 low at 107.32. Short term rallies look possible and selling into strength towards 109.50, with a SL at 109.80 may be a plan.

Sell US$Jpy @ 109.40. SL @ 109.80, TP @ 108.30

Resistance Support
109.76 Friday high 108.50 Minor
109.47 (23.6% of 111.38/108.27) 108.27 Friday low
109.25 Minor 108.00 Minor
109.00 Minor 107.80 Minor
108.80 Minor 107.45 Rising trend support

Economic data highlights will include:

M:  Trade Balance, Unemployment


W:  Industrial Production, Construction Orders, Housing Starts

T: Nikkei Mfg PMI


GBPUSD: 1.4165
Sterling initially headed up to 1.4285 on the back of Friday’s strong UK Q4 GDP figure, suggesting the chance of a May rate hike from the BOE, but then came under heavy selling pressure, particularly undermined by a run for the exits in GbpJpy and GgpChf. Against the dollar, Cable fell to 1.4107, ahead of a bounce to finish the week at 1.4165.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up Weekly Indicators:  Up
Preferred Strategy:  The short term momentum indicators for Cable now look heavy, and a return to 1.4100/10 would not surprise, below which would open the way to the first reasonable Fibo support, at 1.4035. In the longer term, as before, Cable still looks positive and with the daily/weekly momentum indicators aligning higher, another test of 1.4250 (76.4% of 1.5017/1.1821) and Friday’s high at 1.4285 may be on the cards at some stage. Above there would find strong offers at last week’s high of 1.4345 although this looks some way off right now.

Sell GbpUsd @ 1.4220. SL @ 1.4290, TP @ 1.4110

Buy GbpUsd @ 1.4085. SL @ 1.4025, TP @ 1.4300

Resistance Support
1.4345 25 Jan high/Descending trend resistance 1.4125 Minor
1.4285 Friday high 1.4107 Friday low
1.4260 (76.4% of 1.5017/1.1821) 1.4075 Minor
1.4230 Minor 1.4050 Minor
1.4200 Minor 1.4035 (23.6% of 1.3039/1.4344)

Economic data highlights will include:


T: Mortgage Approvals, Consumer Credit, Net Lending, BOE Governor, Mark Carney Speech

W:  Consumer Confidence


F: UK Construction PMI

USDCHF: 0.9335


US$Chf managed to remain above Thursday’s 0.9288 low, on Friday, but it looks precarious, with the Chf strength being driven not just by US$ weakness but also by a hefty selloff in EurChf, which is 200 points lower than this time last week.
1 hour/4 hour indicators: Mixed  – Possible basing formation Daily Indicators: Down Weekly Indicators:  Neutral – Turning lower
Preferred Strategy:  As before, the charts look heavy, and if the support at 0.9288 does get taken out we could head quickly to the August 2015 low at 0.9257, below which there is a black hole until around 0.9150.

On the topside, minor resistance will be seen at 0.9375/85, with further offers likely to arrive at Friday’s high 0.9430 although I don’t think we get there today. Looking to sell rallies, with a SL placed at 0.9570 may be a plan.

Resistance Support
0.9452 (23.6% of 0.9977/0.9288) 0.9303 Friday low
0.9430 Friday high 0.9288 25 Jan low
0.9400 Minor 0.9257 Aug 2015 low
0.9385 Minor 0.9225 Minor
0.9350 Minor 0.9200 Minor

Economic data highlights will include:


T:    Trade Balance




AUDUSD: 0.8108
 AudUsd fell hard on Trump’s hawkish comments about the US$ in early Friday trade, but then found buying interest for the rest of the day and ended by making a new trend high at 0.8135, last seen in May 2015, when the Aud reached 0.8162.
1 hour/4 hour indicators: Up – Bearish Divergence Daily Indicators: Up – Becoming Overbought Weekly Indicators:  Neutral – Turning higher
Preferred Strategy:  The longer term uptrend remains intact, and if 0.8162 is taken out then we might expect to see a run towards 0.8200 and higher, with little resistance seen until 0.8245/90. The 4 hour charts are showing some bearish divergence and warn of a possible minor correction lower although good buying interest should be seen at around 0.8050/60 if we see it.

Buy AudUsd @ 0.8050. SL @ 0.7995, TP @ 0.8160

Resistance Support
0.8200 Minor 0.8100 Minor
0.8180 Minor 0.8075 Minor
0.8162 May 2015 high 0.8055 200 MMA
0.8150 Minor 0.8025 Minor
0.8135 Friday high 0.8004 Friday low /Rising trend support

Economic data highlights will include:

M:  HIA New Home Sales

T:  NAB Business Conditions/Confidence (Dec)

W:  Private Sector Credit, CPI, China Mfg/Non-Mfg PMIs

T: AIG Performance of Mfg Index, Import/Export Index, Building Permits (Dec), Caixin China Manufacturing PMI, RBA Commodity Price Index


NZDUSD: 0.7357
The Kiwi made strong gains last week, reaching 0.7438, before seeing a reversal from the trend high and falling to 0.7288 after Friday’s CPI miss and Trump’s comments, ahead of a bounce to finish Friday at 0.7355.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up – Possible topping formation. Weekly Indicators:  Turning higher
Preferred Strategy:   As before, the daily charts remain positive but look increasingly toppish, and selling rallies may now be the plan, although if the US$ remains under pressure it may be better to trade it through the crosses, possibly against the Aud?  Against the US$, a range of 0.7300/0.7400 would not surprise today. Note that a break of Friday’s low would break below the Rising trend support, possibly signalling that a longer term top is in place and opening the downside towards 0.7185/0.7215.
Resistance Support
0.7485 Minor 0.7325 Minor
0.7450 Minor 0.7290 Friday low
0.7434/30 20 Sept high/25 Jan high 0.7280 (23.6% of 0.6780/0.7433)/Rising trend support
0.7400 Minor 0.7260 Minor
0.7374 Friday high 0.7235 Minor

Economic data highlights will include:


T:  Trade Balance (Dec)



F: Building Permits, NZ Visitor Arrivals (Dec)