7 Nov: Forecast: FX: US$/Majors + trade ideas

By | November 7, 2017

 

EURUSD: 1.1610
Preferred Strategy:  EurUsd has had a choppy session on Monday, either side of 1.1600, but has ended up close by leaving the technical outlook unchanged while the pair continues to respect the head/shoulder resistance at 1.1675.

In the short term, the Euro has recovered from a low of 1.580, leaving the 1.1570/80 as reasonably strong support, but with the momentum indicators generally looking heavy, a retest would not surprise.

As before, as long as the Euro should hold below 1.1675 on a daily-close basis, with the eventual target being at around 1.1250, pretty much in line with the 200 DMA and if we do see a daily close below 1.1570 at any stage we may begin to see an acceleration to the downside, to where 1.1510 will be the next support.

If wrong, a topside break of 1.1675 would trigger stops and could see a run back to 1.1700 where the 100 DMA will provide stern resistance, but above there could see a bigger squeeze towards 1.18000. At this stage this looks doubtful. As long as we don’t see a daily close above 1.1700, I prefer to trade from the short side.

Note that Mario Draghi will be speaking today.

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

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position: Short  – Looking  to add to the position into strength
Resistance Support
1.1700 100 DMA 1.1579 Session low
1.1686/90 3 Nov high /(38.2% of 1.1879/1.1574) 1.1574 27 Oct low /Rising trend support
1.1675 H.S. Neckline /200 HMA 1.1550 Minor
1.1640 100 HMA 1.1525 Minor
1.1623 Session high 1.1510 Rising trend support/(38.2% of 1.0570/1.2091)

Economic data highlights will include:

German Industrial Production, EU Retail Sales, Mario Draghi Speech, US Consumer Credit Change, API Weekly Crude Oil Stock Inventory



USDJPY: 113.76
Preferred Strategy:  US$Jpy spiked higher in Asia yesterday, reaching 114.73, but it has been a downhill slide ever since, with the dollar finishing at session lows of 113.75.

The outlook remains unchanged, and technically the short term momentum indicators still look mixed/flat so a fairly nimble stance is required, with further choppy trade either side of 114.00 looking possible over the next couple of days.

On the downside, support will be seen at the rising trend support at 113.60 and at 113.50, below which could then head back to the 31 Oct low (112.95) although this seems unlikely today. If wrong, a sustained break of 113.00 would see us back in the previous 112/113 range, where 112.75 would be the first level of support ahead of 112.30.

On the topside, minor resistance now lies at 114.00 and above, towards the 114.73 session high, but above which could see a test of the descending trend resistance, currently at around 114.90. A break of 115.00 would then see little resistance until 115.20 and then 115.50.

I remain fairly neutral, although I still like the dollar in the medium term and prefer to buy dips. Today there may be better levels to do so than we are currently trading at given that the 4 hour momentum indicators do look a little heavy.

24 Hour: Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
114.95 Descending trend resistance 113.74 Session low
114.73 Session high 113.60 Rising trend support
114.45 Minor 113.53 2 Nov low
114.25 Minor 113.30 Minor
114.00 Minor 112.95 31 Oct low/(23.6% of 107.31/114.73)


GBPUSD: 1.3173
Preferred Strategy: Cable was bid on Monday against both US$ and the Euro as some optimistic headlines about the Brexit negotiations did the rounds allowing it to continue its recovery from last week’s BOE inspired selloff. A higher oil price did Cable no harm.

The short term momentum indicators now look positive although the dailies are neutral so a cautious stance is required. but a break of nearby resistance at 1.3175/80 would then allow for a run towards 1.3225/50.

On the downside, support will be seen at 1.3150 and then at 1.3130, below which could see a run back to 1.3100 and the session low of 1.3057 although this looks unlikely.

Stay neutral for the time being although the mild preference is to look for levels to buy dips. A rally in the dollar though would probably negate this outlook, so caution is required.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
1.3250 (76.4% of 1.3320/1.3042) 1.3150 Minor
1.3235 Minor 1.3125 Minor
1.3215 (61.8% of 1.3320/1.3042) 1.3100 Minor
1.3175/80 200 HMA/(50% of 1.3320/1.3042) 1.3080 100 DMA
1.3170 Session high 1.3060 Rising trend support


USDCHF: 0.9976
Preferred Strategy: US$Chf had a choppy, sideways session in reaching 1.0028 before falling back below parity to finish the day at session lows at 0.9975.

‘The short term momentum indicators are a little heavy today and may signal a minor decline towards support at 0. 9940/50 and then again at 0.9890/9900 although I don’t think we head back here today.

With the daily/weekly momentum indicators generally looking positive, further dollar strength could be in store down the track and if we can regain parity we could then head on to take another look at 1.0040. Above this there is little to hold the dollar up ahead of 1.0100, and beyond that to 1.1025 and 1.0170.

For now, look for the dollar to chop around current levels and possibly to head a little lower, but with the view of buying dips for an eventual move towards 1.1000+.

Buy US$Chf @ 0.9940. SL @ 0.9885, TP @ 1.0070.

24 Hour: Mildly Bearish – Prefer to buy dips Medium Term: Prefer to buy dips
FX Charts Position: Long
Resistance Support
1.0123 (76.4% of 1.0343/0.9420) 0.9975 Session low
1.0099 11 May high 0.9946 3 Nov low
1.0036/37 27 Oct high /1 Nov high 0.9941 31 Oct low
1.0028 Session high 0.9920 Minor
1.0000 Pivot 0.9890 (23.6% of 0.9420/1.0037)


AUDUSD: 0.7688
Preferred Strategy: The Aud has had a steady session as the consolidation below 0.7700 continues although it is finishing the US session at close to its highs ahead of today’s RBA meeting.

No rate change is forecast but the statement may start tilting to the dovish side given that the domestic retail sales and inflation data continue to disappoint and there is some speculation of talk of a rate cut down the track. I don’t really see it but while we are below the neckline of the head/shoulder formation and the 200 DMA, we could be in for further downside pressure where support will once again arrive at 0.7640/50 and again at 0.7625. A break of this would bring fresh selling which could then see a run towards 0.7600 and eventually to 0.7570.

On the topside, resistance will be seen at 0.7700 ahead of 0.7720 and then 0.7740. Given the generally heavy look of the charts I still prefer to sell into strength. Being Melbourne Cup day, interest will be limited.

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Neutral
FX Charts Position:    Short   SL @ 0.7705
Resistance Support
0.7775 Descending trend resistance 0.7670 Minor
0.7740 (23.6% of 0.8102/0.7624) 0.7638 Session low/3 Nov low
0.7729 2 Nov high 0.7630 (61.8% of 0.7328/0.8124)
0.7700 200 DMA 0.7624 27 Oct low
0.7686 Session high 0.7600 Minor

Economic data highlights will include:

AIG Performance of Construction Index, RBA Interest Rate Decision, Statement, China Foreign Exchange Reserves



NZDUSD: 0.6930
Preferred Strategy: The Kiwi traded a choppy session on Monday, dipping to 0.6873 before a slow and steady climb, assisted by soft US bond yields, to close near the day’s high of 0.6937.

With the daily charts looking mildly positive, further positive momentum could take the Kiwi towards 0.6950, above which would allow for a run to 0.6960/70 and then back to 0.7000 although this seems unlikely today.

On the downside, a move back below 0.6900 could see a retest of 0.6875/80, below which could then see a return to 0.6850. Under there would find strong support at 0.6830 and again at 0.6817, where we have the double bottom with the May low. Below that though would then find that there is little support ahead of 0.6670 although I don’t think we head anywhere close for the time being.  Note that the Global Dairy Trade Index is due later today.

24 Hour: Neutral – Mildly Bullish Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
0.7000 Psychological 0.6900 Minor
0.6970 (38.2% of 0.7210/0.6817) 0.6873 Session low
0.6960 (23.6% of 0.7434/0.6817) 0.6850 Minor
0.6950 3 Nov high 0.6832/30 30 Oct low /31 Oct low
0.6937 Session high 0.6817 11 May low/27 Oct low

Economic data highlights will include:

Global Dairy Trade Index