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

By | November 6, 2017



EURUSD: 1.1608
Preferred Strategy:  After looking as though it wanted to head higher following the release of Friday’s jobs data, the Euro then turned heavy when the US$ staged a broad based recovery, with EurUsd pretty much respecting the head/shoulder resistance at 1.1675 and leaving the outlook unchanged.

As before, the Euro should hold below 1.1675 on a daily-close basis, this being the neckline of the head/shoulder formation and having closed Friday at 1.1605, the momentum seems to point to the downside at the beginning of the week, with the eventual target being at around 1.1250, pretty much in line with the 200 DMA. With the longer term momentum indicators pointing lower I still think we will head in this direction. In the short term, once back below 1.1600 will find strong support at 1.1575 and then again at 1.1510.

If wrong, a topside break 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.

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
1.1725 (50% of 1.1879/1.1574) 1.1598/93 Friday low/30 Oct low
1.1700 100 DMA 1.1574 27 Oct low
1.1686/90 Friday high /(38.2% of 1.1879/1.1574) 1.1550 Minor
1.1675 H.S. Neckline /200 HMA 1.1525 Minor
1.1640 100 HMA 1.1510 Rising trend support/(38.2% of 1.0570/1.2091)

Economic data highlights will include:

M: German Factory Orders, Markit EU Services/Composite PMIs, EU Sentix Investor Confidence Survey , EU PPI, Janet Yellen/William Dudley Speeches

T: German Industrial Production, EU Retail Sales, US Consumer Credit Change, API Weekly Crude Oil Stock Inventory

W: EU Non –MP Meeting Minutes, EIA Crude Oil Stocks Weekly Change

T: German Current Account, Trade Balance, EU Economic Bulletin/Growth Forecasts, US Wholesale Inventories, Jobless Claims

F US Holiday (Veterans Day), Michigan Consumer Sentiment Index

USDJPY: 114.05
Preferred Strategy:  US$Jpy was choppy on Friday, trading the entire day’s range of 113.62/114.42 following the release of the US jobs data, before ending the day, once again, near 114.00.

The outlook remains unchanged, and technically the short term momentum indicators still look mixed/flat so a fairly nimble stance is required.  On the topside, strong resistance now lies at 114.40/50 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.

On the downside, minor support will be seen at 113.80 and at 113.50/60, 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.

I remain fairly neutral, although I still like the dollar in the medium term and prefer to buy dips. Watch out for the BOJ Minutes today – no surprises expected.

24 Hour: Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
115.50 13 March high 113.80 200 HMA
115.19 14 March high 113.62 Friday low
114.90 Descending trend resistance 113.53 2 Nov low
114.49 11 July high/27 Oct low 113.40 Minor
114.42 Friday high 112.95 31 Oct low

Economic data highlights will include:                                                                    

M: BOJ Minutes

T: Leading Economic Index, Coincident Index , BOJ Kuroda Speech

W: Trade Balance, Current Account, Machinery Orders, Foreign Bond/Stocks Investment

T: Tertiary Industry Index, co Watchers Survey, Machine Tool Orders


GBPUSD: 1.3076
Preferred Strategy: Cable spiked to 1.3132 following Friday’s US Jobs data but finished the week back at 1.3075, struggling to hold on to the 8 month rising trend support at 1.3060.

The short term momentum indicators now look mixed although the dailies are beginning to look slightly heavy, and a break of Friday’s  low  of 1.3038 would allow for a run towards 1.3025 and then 1.2995/3000, which should be strong but below which could see 1.2980 and lower.

On the topside, resistance will be seen at 1.3100 and at Friday’s high. I doubt that we head back above here on Monday, but if wrong, look for a move towards 1.3150 and 1.3180. Stay square for now.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
1.3180 (50% of 1.3320/1.3042) 1.3060 Rising trend support
1.3148 (38.2% of 1.3320/1.3042) 1.3038 Friday low
1.3132 Friday high 1.3026 6 Oct low
1.3100 Minor 1.2996 (61.8% of 1.2588/1.3656)
1.3080 100 DMA 1.2984 (76.4% of 1.2777/1.3656)

Economic data highlights will include:





F: UK Goods Trade Balance, Manufacturing/Industrial Production

USDCHF: 1.0004
Preferred Strategy: US$Chf had a brief spike down to 0.9948 on Friday but quickly recovered its poise and finished the week at parity, having briefly reached 1.0024.

‘The short term momentum indicators are mixed/flat on Monday and we should probably expect a fairly steady session, but with the daily momentum indicators generally looking positive, further dollar strength could be in store. If so, above 1.0040, there is little to hold the dollar up ahead of 1.0100, and beyond that to 1.1025 and 1.0170.

On the downside, support will again be seen at 0.9940/50 and then at 0.9900 although I don’t think we head back here in the next few sessions.

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

Buy US$Chf @ 0.9950. SL @ 0.9990, TP @ 1.0070.

24 Hour: Prefer to buy dips Medium Term: Mildly Bullish  – Prefer to buy dips
FX Charts Position: Long
Resistance Support
1.0123 (76.4% of 1.0343/0.9420) 0.9970 Minor
1.0099 11 May high 0.9946 Friday low
1.0075 Minor 0.9941 31 Oct low
1.0036/37 27 Oct high /1 Nov high 0.9920 Minor
1.0024 Friday high 0.9890 (23.6% of 0.9420/1.0037)

Economic data highlights will include:




T: Unemployment


AUDUSD: 0.7650
Preferred Strategy: Having fallen sharply after the soft domestic Retail Sales on Friday, the Aud then chopped around below 0.7700 for the rest of the session, closing the week with a heavy bias at 0.7650, after trading to a low of 0.7639.

Now back below the neckline of the head/shoulder formation and the 200 DMA, we could be in for further downside pressure where support will 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 0.7770/80 ahead of 0.7700 although this seems over the horizon today.

Look for a generally sideways session with just the TD Inflation figure to provide guidance. The real attention will be on tomorrow’s RBA Meeting although no change is expected and the real interest will be in the Melbourne Cup.

Sell AudUsd @ 0.7675. SL @ 0.7705, TP @ 0.7600

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Neutral
FX Charts Position:    Short   SL @ 0.7705
Resistance Support
0.7795 24 Oct high 0.7638 Friday low
0.7775 Descending trend resistance 0.7630 (61.8% of 0.7328/0.8124)
0.7760 Minor 0.7624 27 Oct low
0.7740 (23.6% of 0.8102/0.7624) 0.7600 Minor
0.7729 Minor 0.7570 5 July low

Economic data highlights will include:

M: TD Inflation

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

W: China Trade Balance

T: Investment Lending for Homes, Home Loans, China CPI, PPI

F RBA Monetary Policy Statement, China New Loans

NZDUSD: 0.6906
Preferred Strategy: The Kiwi traded a choppy session between 0.6900/50 on Friday, and with the 4 hour/daily momentum indicators looking mixed we could be in for more of the same today although the RBNZ Q3 Inflation expectations may provide a directional move..

On the downside, a move back below Friday’s low (0.6898) could see a test of 0.6880 below which could then see a return to 0.6860. 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.

On the topside, minor resistance will arrive at 0.6925/30 and again at 0.6950. Above that would allow for a run to 0.6960/70 although this seems unlikely today.

24 Hour: Neutral – Prefer to sell rallies Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
0.7000 Psychological 0.6897 Friday low
0.6970 (38.2% of 0.7210/0.6817) 0.6882 1 Nov low
0.6960 (23.6% of 0.7434/0.6817) 0.6850 Minor
0.6950 Friday high 0.6832/30 30 Oct low /31 Oct low
0.6925 Minor 0.6817 11 May low/27 Oct low

Economic data highlights will include:

M: ANZ Commodity Price Index, RBNZ Inflation Expectations (Q3)

T: Global Dairy Trade Index


T: RBNZ Interest Rate Decision, Monetary Policy Statement, Press Conference

F: Electronic Card Retail Sales