3 May: Forecast: FX: US$/Majors + trade ideas

By | May 3, 2018

 

EURUSD: 1.1954
The US$ has headed to new trend highs against the Euro after some choppy trade around 1.2000 following the FOMC announcement,  which saw rates being left rates on hold and with nothing new in the statement. Having fallen sharply from 1.2025, the Euro has reached a low of 1.1935 where important Fibo support is currently propping it up, but with little bounce so far, the dollar rally seems set to continue.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Down Weekly Indicators:  Turning lower.
Preferred Strategy:  The short term momentum indicators are pointing lower again today, and with the dailies also looking very heavy the Euro does seem set to face further pressure ahead. If so, look for bids at 1.1935 to continue to prop it up in the near term but below which could see a move to the next Fibo level at 1.1910 and even to long term rising trend support, currently at 1.1890. A break of that support would open the way to 1.1800/1.1785 and a strong US jobs data tomorrow could see a run towards those levels.

On the topside, minor resistance will be seen at 1.1975 and 1.2000 ahead of the 200 DMA at 1.2010. The session high was 1.2030, which seems unlikely to be revisited but if wrong, look for a squeeze back to 1.2065.

Sell EurUsd @ 1.1980. SL @ 1.2035, TP @ 1.1890

Resistance Support
1.2065 (23.6% of 1.2475/1.1936) 1.1935/36 (61.8% of 1.1553/1.2555) /Session low
1.2030 Session high 1.1910 (76.4% of 1.1715/1.2555)
1.2012 200 DMA 1.1890 Rising trend support
1.2000 Minor 1.1850 Minor
1.1975 Minor 1.1816 22 Dec low

Economic data highlights will include:                                      

EU Preliminary CPI – Apr, US Trade Balance, Jobless Claims, US Markit /Services/Composite PMIs Services PMI, ISM Non-Mfg PMI, Factory Orders



USDJPY: 109.83
US$Jpy has been choppy but briefly reached 110.02 following the FOMC announcement but is now back at 109.80, unchanged on the day.
1 hour/4 hour indicators: Mixed – Bearish Divergence? Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  Being a Japan holiday today, US$Jpy seems likely to trade a narrow range ahead of Friday’s US Jobs data but as before,  with the longer term charts looking positive, a stronger test of 110.00 seems to be on the cards at some stage. If so, look for a move to 110.20/25, which should be strong, ahead of 110.50 and 110.85. Note that the reverse SHS formation, with the neckline at 107.85, suggests a target at somewhere near 110.70.

Note that the 4 hour charts do hint at some bearish divergence, and on the downside, buyers will be seen today at 109.45/50, which previously acted as a cap, below which could see a run back to the 1 May  low of 109.22, and then to 109.00. Trading from the long side is again preferred although some caution is building due the bearish divergence which may be hinting at a correction, but today looking for dips towards 109.45/50, with a SL placed under 109.00. Japan holiday today.

Buy US$Jpy @ 109.45. SL @ 108.95, TP @ 110.65

Resistance Support
111.00 Minor 109.58 Session low
110.85 (76.4% of 114.73/104.60) 109.45 100 WMA
110.47 2 Feb high 109.22 1 May  low
110.20/25 200 DMA /(61.8% of 114.73/104.60) 109.00/108.96 100 DMA /27 Apr low /30 Apr low
110.02 Session high 108.78 25 Apr low

Holiday



GBPUSD: 1.3575
Cable once again remained under heavy pressure on Wednesday despite a brief recovery after the better than expected UK Construction PMI, and has headed to a new trend low of 1.3553 pretty much where it has finished the day. The daily/weekly charts suggest further trouble ahead, and staying short seems to be the way to go.
1 hour/4 hour indicators: Mixed. Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   While the short term momentum indicators now look a little mixed, the longer term charts are increasingly heavy, and a test of the 200 DMA, at 1.3520, is now not so far away and would not surprise in the days ahead. A break of 1.3500 would find minor bids below, although there really is not too much to prop Sterling up ahead of the January low at 1.3457.

On the topside, if Cable does manage a minor squeeze, near term resistance will be seen at 1.3600, ahead of 1.3640/50 and the session high 1.3665 ahead of the previous long term trend support, currently at 1.3710, although that seems some way off. UK Services PMI today.

Resistance Support
1.3710 Minor 1.3553 Session low
1.3665 Session high 1.3520 200 DMA
1.3650 Minor 1.3457 11 Jan low
1.3620 Minor 1.3425 Minor
1.3600 Minor 1.3400 Minor

Economic data highlights will include:                                                                                        

UK Services PMI



USDCHF: 0.9984
US$Chf, headed higher on Wednesday , reaching a high of 0.9998, closing nearby and so far falling just short of parity although a sterner test of 1.0000 seems just a matter of time.
1 hour/4 hour indicators: Mixed. Daily Indicators: Up Weekly Indicators:   Up
Preferred Strategy:  With the medium term indicators still looking positive for further gains in US$Chf there is no change to the view of trading from the long side. If so, above 1.0000 would open the way to 1.0037 and then to 1.0065/70. Further out we are potentially looking at a run up to 1.0170 and even to the December 2016 high of 1.0343 albeit probably not for a while to come.

The short term momentum indicators could be hinting at a short term top, and if so, on the downside, support will be seen at minor levels 0.9950/35/15 ahead of the 1 May low of 0.9890. This looks unlikely right now but if wrong, on a break of 0.9890, further bids should arrive at 0.9870 and at 0.9845/50.

Buy US$Chf @ 0.9935. SL @ 0.9885, TP @ 0.1.0035.

Resistance Support
1.0100 Minor 0.9950 Minor
1.0067 (76.4% of 1.0343/0.9187) 0.9935 Session low
1.0037 27 Oct 2017 high 0.9915 Minor
1.0000 Psychological 0.9890 1 May  low
0.9998 Session high 0.9871 27 Apr low /30 Apr low


AUDUSD: 0.7494
The Aud reached a brief high of 0.7436 following the FOMC outcome but then sank back below 0.7500 to finish just above the day’s low of 0.7474.
1 hour/4 hour indicators: Mixed – Turning higher? Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators are mixed today although still potentially showing some mild bullish divergence so some caution is warranted, but the longer term momentum indicators point decisively lower so trading from the short side is still the way to go.

If we do see a near term squeeze higher, minor resistance will be seen at 0.7500 and then again at 0.7520, ahead of the session high at 0.7536 and 0.7545/50 and then at 0.7575, although this looks rather doubtful to be seen again today selling rallies is preferred.

The longer term charts remains heavy and would seem to have further losses to come in the days ahead and a break of 0.7470 would then head towards minor support levels taking us down to 0.7400, although there really is not too much to hold it up ahead of the 1 June 2017 low at 0.7371.

A busy day of data could spell a volatile session. AIG Performance of Services Index, New Home Sales, Building Permits, Trade Balance  all coming up.

Sell AudUsd @ 0.7520. SL @ 0.7555, TP @ 0.7380

Resistance Support
0.7575 (23.6% of 0.7915/0.7472) 0.7472/74 1 May  low /Session low
0.7545/50 1 May  high/(23.6% of 0.7813/0.7472) 0.7450 Minor
0.7536 Session high 0.7420 Minor
0.7520 Minor 0.7400 Minor
0.7500 Minor 0.7385 (76.4% of 0.7160/0.8135)

Economic data highlights will include:

AIG Performance of Services Index, New Home Sales, Building Permits, Trade Balance.



NZDUSD: 0.6996
 The Kiwi had another tough day in trading down to 2018 lows of 0.6983, after some choppy trade that saw a high of 0.7030 following the FOMC decision.
1 hour/4 hour indicators: Mixed. Daily Indicators:  Down Weekly Indicators:  Turning lower
Preferred Strategy:   The Kiwi has closed below 0.7000 which would seem to suggest further losses ahead although the short term momentum indicators do seem to be attempting to put in a near term base, and a choppy session may lie ahead while waiting on tomorrow’s US employment data. Back above 0.7000, sellers would again be found on a bounce to 0.7020/30. Beyond here allows for 0.7060 and 0.7080, but probably not today.

On the downside, support will be still seen at 0.6980/90, below which would open the way to the December low at 0.6953. Under here, there is not much to hold the Kiwi up ahead of 0.6935 (76.4% of 0.6780/0.7438) and then 0.6910, long term rising trend support, which is where I think we are eventually heading break of 0.6900 would open up a move to 0.6815 and then to 0.6780

Sell NzdUsd @ 0.7025. SL @ 0.7080, TP @ 0.6955

Resistance Support
0.7094 27 Apr high 0.6984 Session low
0.7080 (23.6% of 0.7395/0.6983) 0.6965 Minor
0.7060 Minor 0.6953 20 Dec low
0.7030 Session high 0.6935 (76.4% of 0.6780/0.7438)
0.7020 Minor 0.6910 Rising trend support

Economic data highlights will include:

ANZ Commodity Prices