5 Mar: Forecast: FX: US$/Majors + trade ideas

By | March 5, 2018

 

EURUSD: 1.2327
EurUsd closed Friday at session highs after Donald Trump’s intervention through his Twitter Account, and right now it looks as though the Euro has the legs to head higher although the EU PMIs, today, and the prospect of a dovish Draghi at the ECB Meeting on Thursday may curb the enthusiasm to buy the Euro up too strongly.

The Euro is opening higher on Monday in early inter-bank trading, currently at 1.2345, following the decision over the weekend by Germany’s Social Democrats, who voted to join Chancellor Angela Merkel’s next government, with Merkel expected to be re-inaugurated by mid-March. We now await the Italian election result.

1 hour/4 hour indicators: Turning higher Daily Indicators: Turning Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  While the daily momentum indicators have been pointing down, they are now looking more neutral, but with the short term momentum indicators looking constructive, we could see a run towards 1.2360 and possibly to 1.2400 although with the ECB due on Thursday there may be diminished interest to buy it up above those levels. The downside currently looks relatively underpinned at 1.2300, but below which will find bids today at 1.2285 and at 1.2260.

Right now I am neutral but In the longer term I think that the strong US data will see the dollar return to a bid tone, and I still prefer to sell Euro rallies from a strategic perspective. The DXY closed the week higher again – just – and the weekly momentum indicators are beginning to look more positive.

Buy EurUsd @ 1.2285. SL @ 1.2245, TP @ 1.2360

Sell EurUsd @ 1.2390. SL @ 1.2435, TP @ 1.2285

Resistance Support
1.2420 19 Feb high 1.2305 Minor
1.2400 (61.8% of 1.2555/1.2155) 1.2285 200 HMA
1.2370 Minor 1.2263 (38.2% of 1.2155/1.2332)
1.2359 21 Feb high 1.2220 (61.8% of 1.2155/1.2332)
1.2332 Friday high 1.2195 (76.4% of 1.2155/1.2332)

Economic data highlights will include:

M: Italian Election Results due, EU/US Markit Services/Composite PMIs, EU Sentix Investor Confidence Survey,  EU Retail Sales – Jan, US ISM Non-Mfg PMIs, Fed speakers; Evans/Quarle

T:   US Factory Orders, API Weekly Crude Oil Stock Inventory

W:  EU Q4 GDP, US ADP Jobs data, Trade Balance – Jan, Consumer Credit Change, EIA Crude Oil Stocks Weekly Change

T: German Factory Orders – Jan, ECB Interest Rate Decision/Press Conference/Statement, US Jobless Claims

F: German Industrial Production, Current Account, Trade Balance,  EU Employment Change – Q1, US Jobs/NFP/Average Hourly Earnings data, Wholesale Inventories



USDJPY: 105.72
US$Jpy headed down to 105.24 after  a hawkish Kuroda and also following Trump’s Twitter tantrum, which pulverized risk sentiment on Friday although the pair did manage a small bounce late in the day, to close back at 105.70

Risk sentiment will again be the main driver for most of this week although Friday will be the main focus, when we have the BOJ Meeting and the US jobs data/ NFP.

1 hour/4 hour indicators: Mixed. Daily Indicators: Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:  US$Jpy  looks heavy again today although, having made a new trend low on Friday at 105.24 – last seen in November 2016 – the 4 hour/daily momentum indicators are now showing a degree of bullish divergence which signals the chance of a bounce. With the hourlies pointing sharply higher, I would not be surprised to see a retest of 106.00 above which could return to 106.20/40. The 4 hour charts look very fragile though and a failure on the topside could see a run back to 105.25, below which there really is not a lot to hold the dollar up ahead of major Fibo support at around 103.50. In the meantime the 200 MMA, at current levels, may prove to be a magnate.
Resistance Support
106.75 (61.8% of 107.67/105.24) 105.60 200 MMA
106.45 (50% of 107.67/105.24) 105.24 Friday low
106.15 (38.2% of 107.67/105.24) 105.00 Minor
106.00 Minor 104.60 Minor
105.80 Minor 104.00 Minor

Economic data highlights will include:

M:

T:

W:  Leading Economic Index, Coincident Index

T:  Japan Q4 GDP, Foreign Bond/Stocks Investment, Trade Balance, Current Account, Eco Watchers Survey

F: BOJ Interest Rate Decision/Statement



GBPUSD: 1.3799
Cable chopped around on Friday, not quite knowing what to make of PM May’s speech  in which she was light on details with regard to N. Ireland & the transition period, while  highlighting that a good deal suits both sides, and that no deal is  better than a bad deal. UK Services PMI today.
1 hour/4 hour indicators: Turning higher? Daily Indicators:  Turning lower. Weekly Indicators:  Possible topping formation.
Preferred Strategy:     Cable remains very choppy, and I suspect is still best left alone, with too many factors, not least Brexit headlines, influencing sharp market moves. The short term momentum indicators do look mildly positive so a retest of 1.3820 may be on the cards, above which could run towards 1.3845/60 and even to 1.3900. On the downside, support will be seen at 1.3750, at 1.3710 and at 1.3690. With the weeklies turning lower I prefer to sell rallies from a longer term perspective.
Resistance Support
1.3900 Minor 1.3754 Friday low
1.3860 (23.6% of 1.4345/1.3711) 1.3711 1 Mar low
1.3845 (38.2% of 1.4070/1.3711) 1.3690 (50% pivot of 1.3062/1.4345)
1.3816 Friday high 1.3670 Minor
1.3800 Minor 1.3615 Minor

Economic data highlights will include:

M: UK Services PMI

T:

W:

T:

F: UK Consumer Inflation Expectation, Manufacturing/Industrial Production, Goods Trade Balance, NIESR GDP Estimate



USDCHF: 0.9371
US$Chf fell sharply in the wake of a selloff in risk sentiment, falling to 0.9337, ahead of a mild bounce as US Treasuries turned higher, reviving some confidence in risk appetite heading into the weekend.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher Weekly Indicators:   Turning lower
Preferred Strategy:  As before, the dailies look constructive, so I prefer to look to buy dips but with the short term momentum indicators pointing lower it may be too early to do so. If so, on the downside, support will be seen at 0.9335/40 and then at 0.9300 today. On the topside, resistance will be seen at 0.9400 and at Friday’s high 0.9423. Above there could see a return to the Thursday high at 0.9490. Unlikely today.
Resistance Support
0.9490 1 Mar high 0.9350 Minor
0.9450 Minor 0.9338 (50% of 0.9187/0.9490)/Friday low
0.9423 Friday high 0.9320 Minor
0.9405 100 HMA 0.9302 (61.8% of 0.9187/0.9490)
0.9385 200 HMA 0.9280 Minor

Economic data highlights will include:

M:

T:  CPI

W:

T:  Unemployment

F:



AUDUSD: 0.7763
The Aud was surprisingly steady against the US$ on Friday, confined to a 40point range despite all the uncertainty over tariffs/trade wars etc. Elsewhere though it did lose ground on the crosses, which look heavy again at the start of the week.  A busy calendar this week will be dominated by the RBA Meeting although no change is expected – either this year, and possibly next. The statement will be the focus. Today sees the domestic/Caixin Services PMIs, the TD Inflation and ANZ Job Ads figures.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Turning lower?
Preferred Strategy:

The short term momentum indicators are looking mildly constructive on Monday, so trading from the long side and buying dips may be the plan. If we do see a squeeze higher, resistance will arrive at 0.7770/75 above which could run to 0.7810. The dailies are pointing lower though so a run back to 0.7735/40 may be on the cards, a break of which would allow a return to 0.7715 and then to 0.7700, below which there is not a lot to hold the Aud up until 0.7650.

Strategically, look to sell at around 0.7815, hoping for a return to 0.7735/15.  Eventually looking for 0.7650(76.4% of 0.7502/0.8135).

Buy AudUsd @ 0.7735. SL @ 0.7710, TP @ 0.7800

Sell AudUsd @ 0.7815. SL @ 0.7855, TP @ 0.7735

Resistance Support
0.7845 Minor 0.7736 Friday low
0.7830 Minor 0.7711 1 Mar low
0.7810 (23.6% of 0.8135/0.7711) /200 HMA 0.7700 Minor
0.7790 Minor 0.7675 Minor
0.7777/72 200 DMA/100 DMA /Friday high 0.7650 (76.4% of 0.7502/0.8135)

Economic data highlights will include:

M: AIG Performance of Services Index, TD Inflation, Company Gross Operating Profits (Q4), ANZ Job Ads, Building Permits, Caixin China Services PMI

T:  Current Account (Q4), Retail Sales – Jan, RBA Interest Rate Decision /Statement

W:  AIG Performance of Construction Index, GDP (Q4)

T: Trade Balance – Jan, China Trade Balance – Feb

F: China CPI/PPI



NZDUSD: 0.7240
The Kiwi is lower at the stat of the week, having fallen from a 0.7279 high and end up close to the low of 0.7218. A light NZ calendar will mean external factors are the key drivers this week.
1 hour/4 hour indicators: Neutral Daily Indicators:  Turning lower Weekly Indicators:  Turning Neutral
Preferred Strategy:   The 4 hour/daily momentum indicators are mixed, so I prefer to stand aside right now. The topside will find offers today at 0.7260/65 ahead of Friday’s 0.7279 high, beyond which opens 0.7300+, while bids will arrive at 0.7220 ahead of 0.7200, with the major downside target being the major Fibo level at around 0.7185, (38.2% of 0.6780/0.7438). A close below the 8 Feb low/200 DMA of 0.7176 would eventually suggest lower levels still, but we have to wait and see on that.
Resistance Support
0.7340 (61.8 % of 0.7436/0.7185) 0.7218 Friday low
0.7310 (50% of 0.7436/0.7185) 0.7200 Minor
0.7300 200 HMA 0.7185 1 Mar low
0.7280 (38.2% of 0.7436/0.7185) /Friday high 0.7176 8 Feb low/200 DMA
0.7250 Minor 0.7140 10 Jan low

Economic data highlights will include:

M:

T:  Global Dairy Trade Index

W:

T: Manufacturing Sales (Q4)

F: Electronic Card Retail Sales