4 May: Forecast: FX: US$/Majors

By | May 4, 2017

 

EURUSD: 1.0886

EurUsd is pretty much unchanged on Thursday, after the Fed left rates on hold, but did briefly spike up 1.0936 following the FOMC statement which gave dollar bulls little new impetus.

Technically, further choppy trade appears likely as we now wait on Friday’s US jobs data. On the topside, the initial resistance will again be seen at 1.0930/35 and then again at the recent trend high of 1.0950, 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/2 May 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.

The dailies still point higher but may be reaching a tipping point, so caution is warranted as there is little data today to push the pair around. More likely we will chop around here while waiting for Friday’s NFP figure. The short term momentum indicators actually point a little lower, so selling near term strength, with a SL above the session high of 1.0936 or above 1.0950 may be a plan.

24 Hour: Range Trade Medium Term: Cautiously 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)
1.0930/36 (61.8% of 1.1300/1.0340) / Session high 1.0760 (50% of 1.0570/1.0947)

Economic data highlights will include:

EU Services/Composite PMIs, US Trade Balance, Jobless Claims, Factory Orders


USDJPY: 112.70

US$Jpy has had another solid session, closing on session highs of 112.70, with the dollar underpinned by the stronger than expected Non-Mfg ISM & the FOMC’s reiteration of a firm monetary policy stance.

Given the neutral look of the short term momentum indicators, we could remain in a fairly tight range near current levels while waiting on Friday’s NFP outcome. The 4 hour charts still 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 again be on holiday, liquidity in the Yen will be rather thin until Friday so I would not expect a great deal of action through Asia/Europe today and it may be that the daily cloud (112.30/85) will cover it.

Below 112.30 could see a reversal to 112.00 although anything under here appears unlikely. On the topside, the initial resistance will be seen at the daily cloud top at 112.85, above which could see a run towards the top of the descending channel, now at 113.00, although I am not sure we get much above there ahead of Friday’s jobs data. If wrong the 100 DMA at 113.35 will attract.

24 Hour: Neutral Medium Term: Mildly bullish – Prefer to buy dips.
                                         Resistance Support
113.65 Minor 112.30 Daily cloud base
113.35 100 DMA 111.95 Session low
113.00 Descending trend resistance 111.80 Minor
112.85 Daily cloud top 111.60 (23.6% of 108.12/112.30)/Weekly cloud top
112.66/70 (61.8% of 115.50/108.12)  /Daily cloud base /Session high 111.20 1 May low

Economic data highlights will include:

Holiday


GBPUSD: 1.2868

Cable continues to use 1.2900 as a pivot, with Brexit concerns still capping the topside below 1.2950.

Further choppy trade looks likely today although the short term momentum indicators now look slightly heavy as Cable closes the US session towards the day’s lows. On the downside the initial support will be seen at 1.2860/70, a break of which could signal a return to 1.2835 (minor) and possibly to 1.2800/10.

On the topside, minor resistance will be seen at 1.2900, 1.2930 and at the session high of 1.2947. A break of the 28 Apr of high (1.2965) may be a stretch too far today, 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 appear to be running out of steam, a cautious stance is now required as we head towards Friday’s US Jobs data, but the weekly and monthly charts both still look positive, suggesting that in the longer term Cable should hold the base of the recent range, around 1.2100. While  I remain neutral in the short term, buying dips from a longer term, strategic perspective is still preferred, looking for another test of the 1.2965 high and eventually 1.3000 and higher. Ahead of Friday, I would expect 1.2800/1.2950 to cover it, and today 1.2830/1.2930 may provide the range.

 24 Hour: Neutral – Mildly bearish Medium Term:  Prefer to buy dips
                                         Resistance           Support
1.3035/30 (38.2% of 1.5018/1.1821) Weekly cloud base 1.2870 Session low /200 HMA
1.2985 55 WMA 1.2863 2 May low
1.2965 28 Apr high 1.2835 Minor
1.2947 Session high 1.2805 26 Apr low
1.2900 Minor 1.2760 (23.6% of 1.2108/1.6965)


USDCHF: 0.9942

US$Chf has had another choppy but largely rangebound session (0.9890/0.9947), leaving the outlook unchanged and it looks as though we are going to continue to use the 200 DMA as a short term pivot for the coming session.

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 could see a return to the session’s spike down to 0.9890 where we now have a minor triple 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
1.0055 (76.4% of 1.0107/0.9893) 0.9910 Minor
1.0025 (61.8% of 1.0107/0.9893) 0.9890 Session low
1.0000 (50% of 1.0107/0.9893) 0.9882 (76.4% of 0.9818/1.0104)
0.9968/74 26 Apr high /(38.2% of 1.0107/0.9893) 0.9865 Minor
0.9950 200 DMA 0.9830 28 Mar low


AUDUSD: 0.7424

he Aud had a tough session on Wednesday, falling from a high of 0.7545 to a low of 0.7420, pretty much where it is closing, with the US$ underpinned by the FOMC outcome and the Aud not helped by commodity prices, which all came under heavy pressure, particularly the metals (Copper -4.5%).

Technically, having now broken below 0.7440 support, there appears to be only minor support until we reach 0.7385, a break of which would seem to have not too much to hold it up until 0.7300 and the rising trend support, at 0.7285.In the short term, the indicators are becoming oversold although rallies look set to remain quite shallow and selling into strength is preferred. On the topside, resistance will be seen at the minor Fibo levels of the fall from 0.7555 and selling into these seems to be the plan. The Australian (March) new home sales and trade balance are data risks in Asia along with the Caixin China Services PMI.

24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
                                         Resistance                                         Support
0.7525 100 DMA 0.7420 Session low
0.7503 (76.4% of 0.7555/0.7420) 0.7400 Minor
0.7485 (50% of 0.7555/0.7420) 0.7385 (61.8% of 0.7160/0.7750)
0.7470 (38.2% of 0.7555/0.7420) 0.7350 Minor
0.7450 (23.6% of 0.7555/0.7420) 0.7330 Minor

Economic data highlights will include:

New Home Sales, Trade Balance, Caixin China Services PMI, RBA Governor Lowe Speech


NZDUSD: 0.6884

Yesterday’s strong NZ Unemployment figure took the Kiwi higher, allowing it to reach 0.6968, before a sharp reversal that now has it trading just above the lows of 0.6866, under pressure from the stronger US$ and the weak Aud.

The shorter term momentum indicators are now pointing lower although the dailies still look fairly neutral, but I would rather trade it from the short side, looking to sell into short term rallies back towards 0.6900.

Below 0.6865 would find minor bids at 0.6845/50 and below this would then find minor support at around 0.6825. Below that would then allow a move to 0.6780 and eventually lower.

24 Hour: Prefer to sell rallies Medium Term: Cautiously bearish
Resistance Support
0.6973/68 (61.8% of 0.7052/0.6847) /Session High 0.6866 Session low
0.6950 (50% of 0.6868/0.6866) 0.6851 1 May low/28 Apr low
0.6925 (38.2% of 0.6868/0.6866) 0.6847 28 Apr low
0.6910 Minor 0.6803 (50% pivot of 0.6347/0.7485)
0.6895 (23.6% of 0.6868/0.6866) 0.6780 (61.8% of 0.6125/0.7485)