3 May: Forecast: FX: US$/Majors

By | May 3, 2017


EURUSD: 1.0929

EurUsd has had another rangebound session, rising slowly from the lows to the highs, where it currently sits at 1.0925.

Technically, further choppy trade appears likely but possibly with a slight upside bias, which may continue to underpin the Euro in the next couple of days although the FOMC statement will decide the direction from here. Until then it should be fairly quiet. The initial resistance will be seen at the session high at 1.0930 and then again at the recent trend high of 1.2950, while a break of 1.0950 would target the 100 WMA at 1.0990, which should be strong resistance at the first attempt. A break of 1.1000 would then see little resistance until 1.1070 although that remains a long way off. On the downside, below the session low of 1.0888, support will be seen at 1.0850/60 and below there at 1.0820/30. Under here would suggest the chance of a top being in place and the possibility of filling in the chart gap, which could see the Euro head back towards 1.0730 although this increasingly distant.

Given that the dailies remain positive, buying dips today towards 1.0860/80 once again seems to be the plan but keep stops on long positions tight, below 1.0820. Wait until the FOMC for anything directional. Until then it should be pretty tight although the EU Q1 GDP may create some waves.

24 Hour: Range Trade Medium Term: Mildly bullish
                                          Resistance Support
1.1070 (76.4% of 1.1300/1.0340) 1.0861/51 (23.6% of 1.0570/1.0947)/26 Apr low
1.1020 Minor 1.0835 200 DMA
1.0990 100 WMA 1.0820 24 Apr low
1.0950 26 Apr high 1.0805 (38.2% of 1.0570/1.0947)
1.0930 (61.8% of 1.1300/1.0340) /Session high 1.0760 (50% of 1.0570/1.0947)

Economic data highlights will include:

EU Provisional Q1 GDP, PPI, ECB Non-Monetary Policy Meeting, US ADP Jobs data, Composite/Services PMIs, FOMC Meeting/IR Decision

USDJPY: 112.01

The Yen was under pressure for much of Tuesday as concerns over the North Korean tensions continued to weigh on the downside, both against the dollar and on the crosses. Despite the “safe-haven” status of the Yen, the geographical proximity of N Korea to Japan has taken the lead, with the dollar heading up to a high of 112.30 before giving up some of its gains to finish at 112.00.

Given the neutral look of the short term momentum indicators, we could remain in a fairly tight range near current level while waiting on today’s FOMC meeting. The 4 hour charts actually show some evidence of short term bearish divergence although with the dailies still looking constructive, longer term traders will be looking to buy any decent dips.  Given that Japan will be on holiday, interest in the Yen will be rather diminished until the FOMC so I would not expect a great deal of action through Asia/Europe.

The short term momentum indicators may be suggesting a minor reversal, and if that is the case, support should arrive at 111.80 and then at around 111.50 (both minor) ahead of 111.30/20 and more solid bids that are likely to arrive at around 111.00. Below 111.00, which seems a little unlikely today, could see a run towards 110.85, 110.50 and to 110.35, which should be strong support if/when we see it. On the topside, the initial resistance will be seen at 112.30, above which there is little to stop the dollar heading on to 112.65 and then to the top of the descending channel, now at 113.00, although I am not sure we get there today, at least ahead of the FOMC.

24 Hour: Neutral Medium Term: Mildly bullish – Prefer to buy dips.
                                         Resistance Support
113.00 Descending trend resistance 111.80 Minor
112.85 Daily cloud top 111.32 (23.6% of 108.12/112.30)/Weekly cloud top
112.66/60 (61.8% of 115.50/108.12)  /Daily cloud base 111.20 1 May low
112.30 Session high 111.06/02 28 Apr low
112.19/15 31 Mar high/(38.2% of 118.66/108.12) 110.86 26 Apr low

Economic data highlights will include:


GBPUSD: 1.2936

Cable dropped to test 1.2865 in early London trade, amid heightened Brexit concerns, but then turned higher on the back of the solid UK Mfg PMI, which reached a 3 year high, to finish at session highs of 1.2938.

Further choppy trade looks likely today and technically, on the downside the initial support will be seen at 1.2900 and at 1.2880 ahead of the session low (1.2863). Below this could signal a return to 1.2840 and possibly to 1.2800/10, although this currently looks unlikely.

On the topside, minor resistance will be seen at 1.2930 and at the 1 May high of 1.2942. A break of the 28 Apr of high (1.2965) may be a stretch too far, but if wrong, we could see a move to 1.3000 – last seen in September – and possibly higher to 1.3035, and then further out to where the longer descending term trend resistance currently lies at around 1.3135.

While the daily momentum indicators remain positive, buying dips is preferred, looking for another test of the 1.2965 high and eventually 1.3000 and higher, although Cable needs to make a move fairly soon as the dailies may soon be on the point of rolling over to the downside.

 24 Hour: Neutral Medium Term:  Prefer to buy dips
                                         Resistance           Support
1.3035/30 (38.2% of 1.5018/1.1821) Weekly cloud base 1.2900 Minor
1.3000 Psychological 1.2880 Minor
1.2985 55 WMA 1.2863 Session low
1.2965 28 Apr high 1.2852 200 HMA
1.2932 Session high 1.2805 26 Apr low

Economic data highlights will include:

UK Construction PMI

USDCHF: 0.9915

US$Chf has had another rangebound session (0.9912/0.9964) leaving the outlook unchanged

While the short term momentum indicators remain neutral, the daily charts still look slightly heavy so a break of minor support at around 0.9910/20 could see a return to 28 Apr’s spike down to 0.9893 where we have a minor double bottom. Below there, further support lies at 0.9880, but a break of which could see a run towards 0.9830. On the topside, resistance will again be seen at 0.9970/75, ahead of a possible return to parity. A neutral stance is currently required.

 24 Hour: Range Trade Medium Term: Neutral – Mildly Bearish
                                         Resistance Support
1.0070 100 DMA 0.9912 Session low
1.0055 (76.4% of 1.0107/0.9893) 0.9893 28 Apr low
1.0025 (61.8% of 1.0107/0.9893) 0.9882 (76.4% of 0.9818/1.0104)
1.0000 (50% of 1.0107/0.9893) 0.9865 Minor
0.9968/74 26 Apr high /(38.2% of 1.0107/0.9893) 0.9830 28 Mar low

AUDUSD: 0.7534

The Aud squeezed up to 0.7555 after the RBA decision yesterday to leave rates on hold, but has since chopped around in a tight range just under 0.7550, while well supported above 0.7500.

The daily momentum indicators still look neutral, while the short term momentum indicators appear to be running out of some steam on the topside, so a cautious stance is again required.  The initial resistance will be seen at the 1 May high (0.7540) and then again at 0.50/55, which should be strong if we get back there. Above here could then see a return to the recent highs of 0.7570, 0.7587 and even to 0.7610 although this seems unlikely.

On the downside, minor support will be seen around 0.0.7500/10 and again at 0.7490 and then again at 0.7465/70. Below here seems unlikely today but strong bids would arrive at 0.7440/50, if we get there. If wrong, below 0.7440 would then find only minor support until we reach 0.7385.

24 Hour: Neutral Medium Term: Neutral
                                         Resistance                                         Support
0.7610 17 Apr high 0.7525 100 DMA
0.7587 24 Apr high 0.7509/12 Session low /200 HMA
0.7571 25 Apr high 0.7490 Minor
0.7555 Session high 0.7467 1 May low
0.7548 200 DMA 0.7447/40 28 Apr low /28 Apr low

Economic data highlights will include:

AIG Services Index

NZDUSD: 0.6934

The Kiwi has had a rangebound session (0.6901/40) although it is closing on its highs and may see a further squeeze to the topside.  The Fonterra milk auction results saw the GDT PI +3.6% and the WMP +5.2%, which did the Kiwi no harm.

While the shorter term momentum indicators suggest the chance another minor squeeze to the topside, the daily charts look pretty much neutral so a cautious stance is probably best today. With the 4 hourlies hinting that we could head slightly higher, look for targets at 0.6950 and 0.6975 ahead of the chance of a retest of 0.7000, although this seems unlikely.

Below 0.6900, which seems less likely right now, would find minor bids at around 0.6880 ahead of the chance of a return to 0.6845/5. Below this would then find minor bids at around 0.6825 and below that would then allow a move to 0.6800/05 and eventually lower.

The NZ Unemployment is due shortly.

 24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7005 (76.4% of 0.7052/0.6847) 0.6901 Session low
0.7990 Minor 0.6880 Minor
0.6973 (61.8% of 0.7052/0.6847) 0.6851 1 May low/28 Apr low
0.6950 (50% of 0.7052/0.6847) 0.6847 28 Apr low
0.6940 Session high /200 HMA 0.6803 (50% pivot of 0.6125/0.7485)

Economic data highlights will include:

NZ Unemployment, ANZ Commodity Index