3 July: Trend table outlook for FX, Commodities, Indices

By | July 3, 2019

Tuesday has been a mixed session for the FX markets, with Yen strength and Sterling weakness the main themes. The major moves of the day were seen in Gold (up) and Oil (down). I suspect that it will mostly be a choppy one today as we head into the US holiday on Thursday, and that position squaring will dominate trade ahead of Friday’s return of the US market and the release of the US Jobs/NFP/Average Hourly Earnings data.

EurUsd:  The Euro saw a brief rally to 1.1320 on Tuesday but is back at previous levels and looking a little heavy heading into Wednesday ahead of the Services PMIs. Overall though, I would imagine that position squaring ahead of the US, July 4 holiday will be the main source of directional inspiration.  The pair still looks heavy in the short term/daily charts, and once below 1.1280, the initial, strong support would arrive at 1.1260 (50% of 1.0306/1.0411/100 DMA). A break of this would then allow for a move towards 1.1223 (61.8%) and eventually to 1.1178 (76.4%). On the topside, minor resistance will once again be seen at 1.1300 and at 1.1315 ahead of the200 DMA at 1.1350.Above here looks unlikely but further gains could then see a run towards 1.1400 and the 25 June high of 1.1411, beyond which the next target is at 1.1447 (20 March high), which ties in with the Fibo level (23.6% of 1.2555/1.1106). For now, trading from the short side looks to be the plan, selling Euro rallies but as I said yesterday, with A Fed rate cut looming, the dollar is going to find it tricky to make any major headway higher.

DXY:  (96.83)  The DXY is pretty much unchanged on Tuesday but still looks mildly positive heading into Wednesday  trade, with the daily momentum indicators pointing mildly higher, suggesting that buying dips is the general theme. If so, the initial resistance is seen at 96.88, above which, look for a run to 97.00 and to the 100 DMA at 97.08.  Beyond here would open the way to 97.20 (minor) and then to 97.97 (18 June high), but probably not today. Support arrives at 96.57 (100 DMA) ahead of 96.40 (minor) and 96.00 (200 WMA) and then at last week’s low of 95.84. Buying dips currently seems to be the plan, but without looking for too much upside momentum I suspect.

US$Jpy: headed sharply lower on the back of the move down in US bond yields, and the fact that traders are resigning themselves to long-term US-China disagreement, creating some safe haven demand. While the daily charts still look mildly positive, the short term momentum indicators are pointing lower and on the downside the initial target will be the 107.75 session low. Below that would see further bids at 107.65 (200/HMA) ,  at 107.35 and at 107.00, below which buyers would be seen at 106.75/80. If this area gives way there are only minor support levels at 106.50 and at 106.20 ahead of the next Fibo level at 105.98 (76.4% of 104.00/112.40).  On the topside, resistance will now be seen at 108.00 and at 108.30 ahead of the 108.55 trend high. As we said before, if we can regain this level, further gains may be slow as there will be plenty of offers appearing in the month-long, choppy, sideways price action, which goes all the way up to 108.80. Nevertheless, the daily charts look constructive and the next Fibo level is seen at 108.90 (38.2% of 112.40/106.78), above which would open the way to 109.00 and higher, with minor resistance seen at 109.1, beyond which would open 109.50 (50% of 112.40/106.78).

AudUsd:  The Aud has chopped around since the RBA rate cut, essentially caught within a 0.6960/0.7000 range, which could well continue through Wednesday given the neutral look of the charts. On the downside, support will be seen at 0.6965/0.6955 (38.2% of 0.6831/0.7033), below which could see a move towards 0.6932 (50% pivot of 0.6831/0.7033) although this looks unlikely today. If wrong, further targets arrive at 0.6908 (61.8%) and to 0.6878 (76.4%). On the topside, offers lie at 0.7000, above which would open the way back to 0.7030/35 (Daily cloud top/100 DMA). This also looks a little unlikely today although if wrong, look for further gains towards 0.7050 and to 0.7070, which should be strong (61.8% of 0.7207/0.6836/ Weekly cloud base, ahead of the 200 DMA at 0.7095. A cautious stance is required although I still prefer to be structurally short given the RBA outlook although bear in mind that the Fed will be cutting rates on July 31.


*Trade of the day: July 3, 2019; 6:33 AM(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 @1.1320. SL @ 1.1355, TP @ 1.1210

Buy EurUsd @ 1.1210. SL @ 1.1185, TP @ 1.1300

Sell AudUsd @ 0.7030. SL @ 0.7080, TP @ 0.6950

Buy AudUsd @0.6935. SL @ 0.6895, TP @ 0.7000