3 Aug: Forecast: FX: US$/Majors

By | August 3, 2017


EURUSD: 1.1855
24 Hour: Neutral Medium Term: Mildly Bullish
EurUsd was volatile on Wednesday but has ended up back in the middle of the day’s range leaving the outlook largely unchanged. Having traded in choppy fashion above 1.180 for much of the day, the Euro briefly eventually spiked up to 1.1909 after the release of the soft US jobs data but has since slipped back to close the day at 1.1850.

Technically, it looks as though we could be in for a choppy session while waiting on tomorrows NFP release, with only secondary data to drive direction today. Back above 1.0910/10 though, there is very little resistance to stand in the way of a move towards 1.2000, and the next Fibo level is not actually seen until 1.2165 (50% of 1.3993/1.0340). While the daily momentum indicators are overbought, hinting at a possible correction, the weekly and monthly charts are both heading firmly higher.

On the downside, near term support arrives at the session low and at the 200 WMA, at 1.1785. Below there, we could head back to the 31 July low of 1.1722 and eventually to 28 July’s low of 1.1670, although a little unlikely at this stage.

Preferred Strategy: The longer term charts remain bullish although the hourlies are showing some bearish divergence so waiting to buy dips, with a SL placed under 1.1785 may be the plan. A choppy session looks more likely.

Resistance Support
1.1996 Dec 14 low/55 MMA. 1.1793 Session low
1.1976 Jan 2015 high 1.1785 200 WMA /1 Aug low
1.1950 Minor 1.1750 Minor
1.1909 1 Aug high 1.1722 31 July low
1.1870 Minor 1.1670 28 July low

Economic data highlights will include:

EU Markit Services/Composite PMIs, EU Economic Bulletin, Retail Sales, US ISM/Markit Services/Non-Mfg PMIs, Factory Orders, Jobless Claims

USDJPY: 110.72
24 Hour: Neutral Medium Term: Neutral
US$Jpy squeezed away from the 110.00 level on Wednesday and reached a high of 110.98 before settling the day at 110.70. EurJpy broke some solid resistance and helped the dollar head higher, and the cross now looks as though it has further to run on the topside.

The short term indicators are mixed, but with the 4 hour charts looking positive we could be in for a minor squeeze to the topside. If so, the initial resistance will be seen at 111.00/05, where the descending trend resistance will see sellers, beyond which would approach the 200 WMA at 111.25 and then 111.40 (100 DMA). These should combine to prevent further gains today, but if wrong, look for a move towards 111.65 and eventually to 111.90 (100 WMA) which should be strong resistance, if/when we get there.

On the downside, support will be seen at 110.25/30 ahead of stronger interest at 110.00. I doubt that we see it down here today but if wrong, then back below the 1 Aug low would allow a run to 109.80 and possibly to 109.65. Below there though could eventually see a run towards 109.25 and even to 108.80 (Weekly Cloud Base).

Preferred Strategy: Prefer to buy dips, although until we close above 111.10, the medium term downtrend remains intact.

Resistance Support
111.65 (38.2% of 114.50/109.92) 110.60 100 HMA
111.40 100 DMA 110.27 Session low
111.25 200 WMA 110.15 (76.4% of 108.80/114.50)
111.00 (23.6% of 114.50/109.92) 109.91 1 Aug low
110.97 Session high 109.65 (76.4% of 108.12/114.50)

GBPUSD: 1.3223
24 Hour: Prefer to buy dips Medium Term: Turning Mildly Bullish
Cable made a new 11 month high of 1.3251 on Wednesday, although it has mostly chopped around near 1.3220 while waiting on today’s BOE Meeting. No change to policy is generally expected despite some calls for a hike, and the MPC vote is expected to be 6-2 in favour of keeping rates on hold. Carney will be speaking after the meeting.

The short-term momentum indicators as mixed/neutral on Thursday, but above the session high there is little to stop Cable heading to 1.3280. Above here 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, back below 1.3190/1.3200, minor support now lies at 1.3160 and 1.3120 ahead of 1.3100. Below there would open the way back to 1.3050/60 which underpinned Cable on 28 July. Below there, unlikely for a while I suspect, would return to 1.3020 ahead of 1.3000.

Preferred Strategy: It is best to wait for the BOE, but technically, as with yesterday, look to buy at around 1.3150 for a run towards 1.3280. SL @ 1.3080.

Resistance Support
1.3400 Minor 1.3190 1 Aug low /Session low
1.3340 13 Sept ‘16 high 1.3160 Minor
1.3300 Minor 1.3120 Minor
1.3278 15 Sept ‘16 high 1.3096 Minor
1.3251 Session high 1.3060 28 July low/ (23.6% of 1.2588/1.3203)

Economic data highlights will include:                                                                                                

BOE Interest Rate Decision /Statement/Minutes/Vote Count/APP Facility , Mark Carney Speech

USDCHF: 0.9703
24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
The Swiss Franc remains under pressure on Thursday, allowing the dollar to push back above 0.9700 with EurChf also pushing higher, today reaching 1.1523, last seen during the SNB inspired Chf flash crash in January 2015. A move back to 1.2000 in the cross would not surprise.

For $/Chf, the short term momentum indicators are mixed, but possibly suggest that the dollar could head a little higher today, and given that the dailies also look positive, if 0.9720/30 can be overcome we could see a quick run higher to where 0.9765 and 0.9805 will provide minor resistance ahead of the 100 WMA at 0.9870.

On the downside, back below 0.9700, minor support lies at 0.9675 and then at the lows of Tuesday/Wednesday, at 0.9646 and at 0.9630, ahead of the 100 MMA (0.9600) which should be decent support if we see it. Below that could then revisit what may be the neckline of a reverse H/S formation at 0.9585 (objective: 0.9745), and back below there would head back to the 200 WMA at 0.9555 and then towards 0.9500

Preferred Strategy:  Prefer to buy dips at 0.9630/45, looking for a topside break of 0.9730. SL sub 0.9600.

Resistance Support
0.9807 30 May high/100 DMA 0.9675 100 HMA
0.9780 Minor 0.9646 Session low
0.9765 (50% pivot of 1.0100/0.9437) 0.9630 1 Aug low
0.9726 28 July high 0.9600 100 MMA
0.9712/10 31 July high/Session high 0.9585 Neckline

AUDUSD: 0.7966
24 Hour: Prefer to sell rallies Medium Term: Neutral – Possibly look to buy dips.
The Aud has had a choppy session, trading down to 0.7940 early on, before a squeeze up to 0.7992 in NY trade, and then settling pretty much where it started the day at 0.7960, right on the 200 HMA.

The 200 MMA and the 200 WMA may continue to act as a bit of a magnate today, but on the downside minor support would arrive at 0.7935/40 and below here could then see a run towards 0.7890/00 ahead of the strong area at 0.7875.

On the other hand, the longer term charts (weekly/monthly) still hint that buying dips remains the medium term plan and if we head back above 0.8000, we could then see a return to Tuesday’s high of 0.8041 and then to the trend high of 0.8065. Above 0.8065, there is little to stop the Aud from heading to 0.8160, albeit probably not today.

Preferred Strategy: The dailies are looking increasingly toppish, so selling rallies with a SL above 0.8000 could be a plan. The June Trade Balance is coming up and may provide something directional but I suspect we are in for a similar session to yesterday.

Resistance Support
0.8065 26 July high 0.7960 200 HMA
0.8042 1 Aug high 0.7940/36 Session low /28 July low
0.8000 200 WMA 0.7915 Minor
0.7992 Session high 0.7890 (23.6% of 0.7328/0.8065)
0.7975 200 MMA 0.7874 21 July low /26 July low

Economic data highlights will include:                       

AIG Services PMI, Trade Balance (June), Caixin Services PMI

NZDUSD: 0.7429
24 Hour: Prefer to sell rallies Medium Term: Neutral
The Kiwi was undone by the soft jobs data yesterday, and having fallen a quick 30 points it has since chopped around above 0.7400, hanging close to the 200 WMA.

The short term momentum indicators are mixed although the 4 hour charts do point lower, and a break of 0.7410 could then see a move towards 0.7380/85, below which could see a return to the rising trend support, currently at 0.7340.

On the topside, the weekly charts still suggest that further medium term gains may lie ahead, and back above 0.7475 may lead the Kiwi back to 0.7500. Beyond there, unlikely today, could then return to the 1 Aug high of 0.7525 and then to 0.7545 (strong: 100 MMA/55 MMA) and the 27 July high (0.7557). Further out, there is little resistance to stop the Kiwi from heading on towards 0.7575 and above that there is nothing to stop it heading to 0.7740/45 (April 2015 high).

Preferred Strategy: Neutral – Possibly look to sell rallies, with a SL placed above 0.7475.

Resistance Support
0.7545 100 MMA/55 MMA 0.7425 200 WMA
0.7525/24 28 July high /1 Aug high 0.7410 Session low
0.7500 Pivot 0.7383 (23.6% of 0.6817/0.7557)
0.7475 Session high 0.7360 Minor
0.7465 200 HMA 0.7340 Rising trend support

Economic data highlights will include:

ANZ Commodity Index