31 July: Forecast: FX: US$/Majors

By | July 31, 2017


EURUSD: 1.1749
24 Hour: Prefer to sell rallies  – SL above 1.1800 Medium Term: Mildly Bullish
The Euro was driven mostly by the crosses on Friday, especially by demand in EurChf, although it remained well bid against the dollar as well, following the release of the US GDP data.

Technically, the Euro pulled up short of last week’s trend high of 1.1776 and also the 200 WMA, at 1.1790, which will continue to act as a formidable hurdle, if/when we get there.  In the meantime, the daily momentum  are now becoming increasingly overbought and so sellers will again arrive in the 1.1750/75 area  on Monday.

The weekly indicators still point higher though, and a break of 1.1790/1.1800 could mean that we on our way to 1.2000 and potentially to 1.2150 albeit that this is still a long way off.

On the downside, near term support arrives at 1.1700 and then again at 1.1650, ahead of the May 2016 high/pivot of 1.1616 which has successfully underpinned the Euro in recent days. A downside break of 1.1600 could then see a run back towards 1.1560/80 and possibly to 1.1500.

The German Retail Sales, EU CPI and US Pending Home Sales will provide the direction today along with some regional Fed activity.

Preferred Strategy: In the short term I mildly prefer to sell rallies as long as the Euro stays under 1.1800. Longer term; buying dips seems to remain the theme.

Resistance Support
1.1850 Minor 1.1725 Minor
1.1825 Minor 1.1700 Minor
1.1790 200 WMA 1.1670 Friday low
1.1776 26 July high 1.1649 27 July low
1.1763 Friday high 1.1612 26 July low /(23.6% of 1.1118/1.1776)

Economic data highlights will include:

M:  German Retail Sales, EU Unemployment, CPI (July), Chicago Purchasing Managers Index, Pending Home Sales, Dallas Fed Mfg Business Climate

T:  German Unemployment, EU Markit Manufacturing PMIs, EU Q2 GDP (Provisional), US Personal Spending, Consumption/Expenditure Price Index, ISM Mfg PMI/Prices Paid, Total Vehicle Sales, Construction Spending, API Weekly Crude Oil Stock Inventory

W: ECB Non-Mfg Meeting, EU PPI, US ADP Jobs data, ISM NY Index, EIA Crude Oil Stocks Weekly Change

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

F: German Factory Orders, US Jobs/NFP/Average Hourly Earnings data

USDJPY: 110.69
24 Hour: Neutral Medium Term: Neutral
The dollar was weighed down on Friday by the end of the US Healthcare debate, the soft US Q2 data and the general White House chaos, falling to a low of 110.54, before closing at 110.70.

The short term momentum indicators suggest that further downside pressure may be possible, and a break of the Friday low would allow a run to the trend support at 110.35, a break of which would find bids at 110.15 and possibly to 109.65 although that remains some way off.

On the topside, minor resistance will be seen at 111.00 and then at Friday’s high of 111.32 although this seems unlikely to be seen today. If wrong, look for a run up towards 111.55 and then to 111.70 ahead of 111.90 (100 WMA) which should be strong resistance, if we get there.

Preferred Strategy: Neutral – possibly sell rallies above 111.00 or buy dips to 110.35, with a SL placed below the rising trend support.

Resistance Support
111.70 27 July high /Descending trend resistance 110.55/54 (61.8% of 108.12/114.50) /Friday low
111.55 100 DMA /200 HMA 110.35 Rising trend support
111.32 Friday high 110.15 (76.4% of 108.80/114.50)
111.00 Pivot 109.80 Minor
110.80 Minor 109.65 (76.4% of 108.12/114.50)

Economic data highlights will include:

M:  Japan Industrial Production, Construction Orders, Housing Starts


W:  Japan Consumer Confidence



GBPUSD: 1.3131
24 Hour: Neutral Medium Term: Turning Mildly Bullish
With the US$ trading under pressure, Cable remained firm on Friday, reaching a high of 1.3150 but unable to overcome the week’s peak of 1.3158, before closing at 1.3130.

The short term momentum indicators look mixed and a fairly cautious stance is required on Monday although the dailies do seem to be picking up a little steam, and if we can take out the 27 July/trend high at 1.3158 there is little to stop Cable heading on towards 1.3200 and then to 1.3280. Above there 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 minor support now lies at 1.3100 and then at 1.3050/60 which underpinned Cable on Friday. Below there, unlikely today I suspect, would return to 1.3020 ahead of 1.3000. Below last Monday’s low of 1.2983 could then see a return to 1.2940/50 which would find added support at the 20 July low of 1.2933.

Preferred Strategy: Neutral  today, although looking to buy dips for a possible run towards 1.32/1.33 (Perhaps if the BOE hike on Thursday).

Resistance Support
1.3340 13 Sept ‘16 high 1.3100 Minor
1.3278 15 Sept ‘16 high 1.3060 Friday low
1.3250 Minor 1.3049 27 July low
1.3200 Minor 1.3020 (23.6% of 1.2588/1.3158)
1.3158/51 27 July high /Friday high 1.2998 26 July low

Economic data highlights will include:                                                                                                

M:  UK Consumer Credit, Inflation Report Hearing



T:  BOE Interest Rate Decision /Statement/Minutes/Vote Count/APP Facility


USDCHF: 0.9685
24 Hour: Neutral Medium Term: Mildly Bullish
The Chf remains under heavy pressure on all fronts, reaching 0.9726 against the US$ and 1.1405 against the Euro, a 2 ½ year high; and having closed above the 200 WMA for the first time in 11 years, this suggests further Euro gains lie ahead on the cross.

Against the dollar, the short term momentum indicators are mixed on Monday and we may just chop around near 0.9700 but the dailies look increasingly positive, and if 0.9720/30 can be overcome then 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, minor support lies at 0.9650 and then at Friday’s low of 0.9637, ahead of what may be the neckline of a reverse H/S formation at 0.9585 (objective: 0.9745). Back below there would head back to the 200 WMA and then towards 0.9500 although this currently looks unlikely.

Preferred Strategy:  Prefer to buy dips, looking for a topside break of 0.9730.

Resistance Support
0.9807 30 May high/100 DMA 0.9660 Minor
0.9765 (50% pivot of 1.0100/0.9437) 0.9633 Friday low
0.9740 Minor 0.9600 100 MMA
0.9726 Friday high 0.9585 Neckline
0.9700 Minor 0.9555 200 WMA

AUDUSD: 0.7986
24 Hour: Neutral Medium Term: Neutral – Possibly look to buy dips.
The Aud was heavy through much of Friday’s session, but recovered strongly from the 0.7936 low to trade up to 0.8007 after the release of the US data, before closing at 0.7985. With the momentum indicators looking rather mixed it seems as if we could chop around close to 0.8000 today, while waiting on the RBA tomorrow, although the China Manufacturing PMI today could cause a quick move, especially if it comes in above expectation (previous 51.6), which could well be the case if the recent solid Chinese figures are a guide.

The 100 MMA may also continue to act as a magnate; below which minor support would arrive at 0.7950 ahead of Friday’s low of 0.7936. Below here, unlikely today, 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 still hint that buying dips remains the medium term plan, and if we head back above 0.8000, the 200 WMA (0.8015) will again provide a hurdle but above which could then see a return to the trend high of 0.8065. Above 0.8065, there is little to stop the Aud from heading to 0.8160, albeit not today.

Preferred Strategy: Neutral.

Resistance Support
0.8162 May 2015 high 0.7975 100 MMA
0.8100 Minor 0.7950 Minor
0.8065 26 July high 0.7936 Friday low
0.8015 200 WMA 0.7890 (23.6% of 0.7328/0.8065)
0.8006 Friday high 0.7874 21 July low /26 July low

Economic data highlights will include:                       

M:  HIA New Home Sales, TD Inflation, Private Sector Credit, China Mfg/Non-Mfg PMI

T:  AIG Mfg PMI, Caixin China Mfg PMI, RBA Interest Rate Decision/Statement, RBA Commodity Index

W: Building Permits

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

F:  Retail Sales (June), RBA Monetary Policy Statement

NZDUSD: 0.7516
24 Hour: Neutral Medium Term: Neutral -Prefer to buy dips
The Kiwi traded down to 0.7460 in early Europe but then rallied strongly on Friday following the release of the US data, regaining 0.7500 and closing near session highs of 0.7525.

The short term momentum indicators are now mixed and a cautious stance in needed for Monday, but dips look likely to meet good demand at close to 0.7500. Below there could see a run back towards 0.7480 and to 0.7460 although this seems unlikely. If wrong, we could then see a run towards 0.7430, which should be strong support, being the 200 WMA, were we now have a 2nd consecutive weekly close to the topside, last seen in Sept 2014.

On the topside, the dailies still look positive, although they are becoming somewhat overbought but the weekly charts also still suggest that further medium term gains look likely, and back above 0.7525 could then revisit the 27 July high (0.7557), beyond which there is little resistance to stop the Kiwi from heading on towards 0.7575. Above that there is nothing to stop it heading to 0.7740/45 (April 2015 high).

Preferred Strategy: Neutral. Possibly look to sell rallies today, above 0.7500, but not looking for too much.

Resistance Support
0.7600 Minor 0.7500 Pivot
0.7575 May 2015 high 0.7480 Minor
0.7557 27 July high 0.7460 Friday low
0.7545 100 MMA/55 MMA 0.7430 200 HMA /200 WMA
0.7525 Friday high 0.7400 25 July low

Economic data highlights will include:

M:  NZ Building Permits, ANZ Business Confidence, Activity Outlook (July)

T:  Global Dairy Trade Index

W:  Unemployment

T: ANZ Commodity Index