31 Oct: Forecast: FX: US$/Majors + trade ideas

By | October 31, 2017

 

EURUSD: 1.1651
Preferred Strategy:  EurUsd is closing at session highs as the pair consolidates after last week’s fall.  Ideally this should hold below1.1670, the 100 DMA and the neckline of the head/shoulder formation, but a topside break would trigger some stops and could see a run back to 1.1700+, and the 4 hour charts do suggest that this is a possibility. In the longer term, with the head shoulder trade now fully in play, the target is at around 1.1250 and with the longer term momentum indicators pointing lower I still prefer to be short and to add to the position into any near term strength. Back below 1.1600 will find strong support at 1.1575 and then again at 1.1510.

Sell EurUsd @ 1.1670 & @ 1.1700. SL @ 1.1730, TP @ 1.1500.

24 Hour: Prefer to sell rallies Medium Term: Bearish
FX Charts Position: Short  – Looking  to add to the position into strength
Resistance Support
1.1745 200 HMA 1.1593 Session low
1.1725 (50% of 1.1879/1.1574) 1.1574 27 Oct low
1.1690 (38.2% of 1.1879/1.1574) 1.1550 Minor
1.1670 100 DMA/H.S. Neckline 1.1510 Rising trend support/(38.2% of 1.0570/1.2091)
1.1657 Session high 1.1490 Minor

Economic data highlights will include:

German Holiday, EU Provisional Q3 GDP, Economic Growth Forecasts, CPI, Case Shiller House Price Index, Chicago Purchasing Managers Index, API Weekly Crude Oil Stock Inventory



USDJPY: 113.17
Preferred Strategy:  As we thought yesterday, US$Jpy looked heavy and has tested the 113.00/10 support which has currently held. While the short term charts still look heavy, the dailies are fairly neutral  so a fairly nimble stance is required, but with political concerns coming to the fore, including speculation of a dilution of the  US tax plan and the increasing thoughts of the relatively dovish Powell becoming the next Fed chair, further downside momentum would not surprise. In the meantime, today’s BOJ meeting is expected to contain few surprises.

Below 113.00 would see us back in the previous 112/113 range, where 112.75 would be the first level of support ahead of 112.50. On the topside, back above 113.50 would find offers at 113.85 and again at 114.00although this does not look like being bothered today. If wrong, above 114.00, minor resistance will be seen at 114.20/25, above which 114.45/50 is an increasingly strong hurdle to overcome.

24 Hour: Neutral – Mildly Bearish? Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
114.49 11 July high/27 Oct low 113.02 Session low
114.20 Minor 112.75 (23.6% of 107.31/114.44)
114.00 Minor 112.30 19 Oct low
113.83 Session high 112.00 Minor
113.50 Minor 111.72 (38.2% of 107.31/114.44)

Economic data highlights will include:                                                                       

Japan Unemployment BOJ Interest Rate Decision/Press Conference/Statement, Housing Starts, Construction Orders



GBPUSD: 1.3207
Preferred Strategy: Cable remains bid ahead of Thursday’s BOE meeting and sits at 1.3200 after trading up to 1.3215 in NY. I remain fairly neutral although I suspect that the BOE will hike and so the potential is for further upside momentum but depends largely on Carney’s future guidance/outlook, and before then, Cable could well chop around within the broad 1.3100/1.3250.  The momentum indicators are generally mixed/flat although the short term momentum indicators are possibly looking a little more positive, so we may see a sterner test of the NY high, above which the descending trend resistance at 1.3235 will sell sellers. A break would suggest a run to 1.3275 and possibly 1.3300 although possibly not today.  On the downside, minor support will be seen at 1.3180 and 1.3150 ahead of the session low of 1.3112.
24 Hour: Neutral – Mildly Bullish? Medium Term: Neutral
FX Charts Position: Flat (Long GbpAud)
Resistance Support
1.3310 16 Oct high 1.3180 Minor
1.3286 17 Oct high 1.3150 Minor
1.3278 27 Oct high /100 WMA 1.3130 Minor
1.3235 Descending trend resistance 1.3112 Session low
1.3215 Session high 1.3070 27 Oct low /100 DMA

Economic data highlights will include:                        

UK Consumer Confidence



USDCHF: 0.9943
Preferred Strategy: US$Chf is a little lower today, currently at session lows of 0.9938, and for the time being it looks as though a top may be in place at Friday’s 1.0037 high. The 4 hour charts hint at a more extended dip, to where support would lie at 0.0.9920 and then at 0.9900 and at 0.9875.

As before though, with the dailies still looking positive I suspect that the dollar will eventually take another look at 1.0035/40 and beyond, where the next major level is seen at 1.0099.

For now, look for the dollar to remain a little heavy, but with the view of buying dips for an eventual return to parity and above.

Buy US$Chf @ 0.9900. SL @ 0.9960, TP @ 1.0070

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish  – Prefer to buy dips
FX Charts Position: Long – at market price (0.9940).
Resistance Support
1.0099 11 May high 0.9938 Session low
1.0075 Minor 0.9920 Minor
1.0037 27 Oct high 0.9890 (23.6% of 0.9420/1.0037)
1.0000 Psychological 0.9868 67 Oct low
0.9996 Session low 0.9850 Minor


AUDUSD: 0.7687
Preferred Strategy: AudUsd is squeezing a little higher and is sitting at session highs towards the end of the US session. With both the 1 & 4 hour charts still looking positive, a run back to 0.7700 would not surprise, above which, a run back to 0.7740 could be on the cards although I don’t really see. it but would sell into it if we were to do so. The direction today will come via the Home Sales/Private Sector Credit and from the China Manufacturing/Non-manufacturing PMIs.

In the medium term trading from the short side remains favoured, looking for another run towards Friday’s lows of 0.7625 and eventually towards 0.7570 although that won happen today and I suspect we may drift a little higher.

Sell AudUsd @ 0.7715. SL @ 0.7755, TP @ 0.7630

24 Hour: Mildly Bullish – Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position:    Short  – Looking  to add to the position into strength
Resistance Support
0.7770 Minor 0.7655 Session low
0.7740 (23.6% of 0.8102/0.7624) 0.7630 (61.8% of 0.7328/0.8124)
0.7715 Minor 0.7624 27 Oct low
0.7690 200 DMA 0.7600 Minor
0.7688 Session high 0.7571 7 July low

Economic data highlights will include:              

New Home Sales, Private Sector Credit, China Manufacturing/Non-manufacturing PMIs



NZDUSD: 0.6877
Preferred Strategy: The Kiwi remains heavy although it is attempting a recovery of sorts, and is finishing at the day’s highs after a tight 0.6833/87 range. The dailies are still negative, and as before, trading from the short side and selling rallies seems to be the plan. On the downside, a move back below the session low would find strong support at 0.6817, where we have a double bottom with the May low. Below that though would then find that there is not too much support ahead of 0.6670 although I don’t think we make new lows today. The short term momentum indicators look a little more positive, and as with yesterday, resistance will be seen at 0.6885/0.6910, and selling into rallies is preferred.

Sell NzdUsd @ 0.6900. SL @ 0.6940, TP @ 0.6815

24 Hour: Mildly Bullish – Prefer to sell rallies Medium Term: Bearish
FX Charts Position: Flat
Resistance Support
0.6970 (38.2% of 0.7210/0.6817) 0.6832 Session low
0.6950 Minor 0.6817 11 May low/27 Oct low
0.6935 Minor 0.6800 Minor
0.6910 (23.6% of 0.7210/0.6817) 0.6760 Minor
0.6887 Session high 0.6720 Minor

Economic data highlights will include:

NZ Building Permits, ANZ Activity Outlook