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

By | July 4, 2019

Wednesday has been another mixed session for the FX markets, with strength in Aud and Nzd being the main themes against both the US$ and on the crosses. It looks as if this might continue through today, with the charts looking supportive of both currencies, although it seems likely to be a quiet one as we head into the US holiday on Thursday. Position squaring will most likely dominate trade ahead of Friday’s return of the US market and the release of the US Jobs/NFP/Average Hourly Earnings data. Elsewhere, stocks still look constructive and seem likely to see further blue sky as they make new all-time highs. Oil and Gold are both volatile and seem set to remain so but the daily charts look fairly neutral so I have no real directional view for either.

EurUsd:  The Euro chopped around familiar levels on Wednesday but remains pretty much unchanged, currently at 1.1280. I would imagine that it will be pretty quiet today, ahead of the US, July 4 and think we are likely to remain within a 1.1265/1.1310 range for the coming session although the pair still looks mildly heavy in the 4 hour/daily charts. Below 1.1275/80, the initial, strong support would arrive nearby, at 1.1260 (50% of 1.0306/1.0411/100 DMA), but 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 before, with a Fed rate cut looming, the dollar is going to find it tricky to make any major headway higher.

DXY:  (96.77)  The DXY is pretty much unchanged on Wednesday but still looks mildly positive heading into Thursday   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: remains heavy, currently at 107.80, due to 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 for the Jpy. While the daily charts still look mildly positive, the short term momentum indicators are mixed, suggesting a rangebound session ahead. Support will be seen at 107.53 (session low) ahead of 107.35 and 107.00, below which buyers would be seen at 106.75/80. If this area ever 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 , 1 July 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 do look mildly 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). I remain neutral on the pair, but direction awill continue to be driven by safe haven demand and by US yields and if these continue to be the headline news, we can expect further Jpy strength.

AudUsd:  The Aud has moved sharply higher after breaking above 0.700 yesterday and with the medium term momentum indicators looking constructive it may be that we see further gains. If so, offers lie immediately ahead at 0.7035/40 (Session high – 0.7038), Daily cloud top/100 DMA), above which, look for further gains towards 0.7050 and to 0.7070 – which should be strong – (61.8% of 0.7207/0.6831/ weekly cloud base, ahead of the 200 DMA at 0.7095. On the downside, support will be seen at 0.7015, 0.7000 and again at 0.6990 (23.6% of 0.6831/0.7038), below which could see a move towards 0.6960 (38.2% of 0.6831/0.7038) although this looks unlikely today. If wrong, further targets arrive at 0.6935 (50%) and at 0.6910 (61.8%). 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 4, 2019; 8:03 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 @1.1315. SL @ 1.1355, TP @ 1.1210

Buy EurUsd @ 1.1250. SL @ 1.1215, TP @ 1.1310

Sell AudUsd @ 0.7070. SL @ 0.7100, TP @ 0.6970

Buy AudUsd @0.7000. SL @ 0.6980, TP @ 0.7060