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

By | May 7, 2018

 

EURUSD: 1.1962
The US$ briefly headed to new trend highs against the Euro following the mixed US employment report on Friday, with the pair trading in volatile fashion, up to 1.1995 and then down to 1.1910 before a bounce to finish mid-range at 1.1963.  A cautious outlook seems wise at the start of the week with the momentum indicators looking rather contrary, although the longer term charts tell us that this dollar uptrend is not finished with yet. It is a thin calendar this week. Thursday’s US CPI will be the key focus.
1 hour/4 hour indicators: Turning higher Daily Indicators: Down Weekly Indicators:  Turning lower.
Preferred Strategy:  Having bounced off the Fibo support at 1.1910 the short term momentum indicators are pointing a bit higher on Monday although, with the dailies still looking very heavy the Euro does seem to face further pressure ahead. If so, look for bids at the Fibo levels at 1.1935/10 to continue to provide support in the near term, but below which could see a move to the long term rising trend support currently at 1.1890. A break of that would open the way to minor support at 1.1850 and 1.1815 ahead of the stronger level seen at 1.1800/1.1785 (76.4% of 1.1553/1.2555).

On the topside, minor resistance will be seen at 1.1975 and 1.1995/1.2000 ahead of the 200 DMA at 1.2010. The 2 May high was 1.2030, which seems unlikely to be revisited today, but if wrong, look for a squeeze back to 1.2065.

Sell EurUsd @ 1.2020. SL @ 1.2070, TP @ 1.1900

Resistance Support
1.2065 (23.6% of 1.2475/1.1936) 1.1935 (61.8% of 1.1553/1.2555)
1.2030 2 May high 1.1910 (76.4% of 1.1715/1.2555) /Friday low
1.2012 200 DMA 1.1890 Rising trend support
1.2008 03 May high 1.1850 Minor
1.1994 Friday high 1.1816 22 Dec low

Economic data highlights will include:

M: German Factory Orders – Mar, US Consumer Credit Change – Mar

T:  German Industrial Production, Trade Balance, Current Account – Mar, US NFIB Business Optimism Index, API Weekly Crude Oil Stock Inventory

W:  US PPI – Apr, Wholesale Inventories – Mar

T: EU Holiday – Ascension Day, US CPI, Monthly Budget Statement

F: US Import/Export Index, Preliminary Michigan Consumer Sentiment Index – May, Baker Hughes Oil Rig Count



USDJPY: 109.03
US$Jpy was choppy but ended Friday pretty much unchanged after a range of 109.26/108.63 following the release of the NFP figures. The BOJ Minutes are up today.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning lower. Weekly Indicators:  Turning higher
Preferred Strategy:  The daily charts are now suggesting that a medium term top may be in place although the short term momentum indicators do hint that Monday may see a minor squeeze to the topside.

If so, Friday’s high of 109.26 will see sellers ahead of 109.50, a break of which could possibly see a return to strong resistance at 110.00 although this looks doubtful today. I wrong, on a break of 110.00, look for a move to 110.20/25, which should also be strong, ahead of 110.50 and 110.85. Note that the reverse SHS formation, with the neckline at 107.85, suggests a target at somewhere near 110.70.

The dailies do seem to be turning lower though, and with the 4 hour charts also looking heavy a retest of the 100 DMA and then Friday’s low of 108.63 seems the most possible route. Below this will find bids at 108.50/55, a break of which could then head back to the neckline of the head/shoulders formation, currently at 108.05. If seen this might be a decent buy opportunity but I would be keeping a pretty tight SL placed below 107.70.

Resistance Support
110.20/25 200 DMA /(61.8% of 114.73/104.60) 108.75 100 DMA
110.02 2 May high 108.63 Friday low
110.70 Minor 108.54 24 Apr low
109.45 100 HMA 108.30 Minor
109.30/26 200 HMA /Friday high 108.05 Minor

Economic data highlights will include:

M: BOJ Minutes

T:

W:  Leading Economic Index, Coincident Index – Mar

T: Foreign Bond/Stocks Investment, Current Account, Trade Balance – Mar, Eco Watchers Survey

F: Total Vehicle Sales



GBPUSD: 1.3533
Cable once again remained under heavy pressure on Friday in falling below the 200 DMA at 1.3535, to a new trend low of 1.3485 ahead of a bounce, to finish the week right on the 200 DMA, requiring a cautious stance at the start of the week although the daily/weekly charts suggest further trouble ahead. A UK Bank holiday will mean a thin session in terms of liquidity.
1 hour/4 hour indicators: Mixed.- Turning higher Daily Indicators: Down Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators now look a little positive at the start of the week, and if Cable does manage a minor squeeze, near term resistance will be seen at Friday’s high of 1.3585 ahead of 1.3600. Beyond there, 1.3640/50 and the 2 May high 1.3665 would see sellers although that seems some way off right now.

The longer term charts still look very heavy, and a retest of the 1.3485 would not surprise in the days ahead, a break of which would open the way to the January low at 1.3457 and the major Fibo level at 1.3400 (38.2% of 1.1821/1.4376)

Selling rallies is preferred.

Resistance Support
1.3665 2 May high 1.3535 200 DMA
1.3629 3 May high 1.3500 Minor
1.3600 Minor 1.3485 Friday low
1.3585 Friday high 1.3457 11 Jan low
1.3555 Minor 1.3425 Minor

Economic data highlights will include:

M:

T:

W:

T: Manufacturing/Industrial Production, Goods Trade Balance – Mar, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, BOE Governor, Mark Carney Speech

F:



USDCHF: 0.9998
US$Chf, headed up to 1.0021 on Friday after the NFP, closing the week at 1.0000, with the dailies suggesting the trend higher will continue although the 4 hour charts do show some minor bearish divergence.
1 hour/4 hour indicators: Mixed- Turning lower Daily Indicators: Up Weekly Indicators:   Up
Preferred Strategy:  With the medium term indicators still looking positive for further gains in US$Chf there is no change to the view of trading from the long side although the short term charts are starting to hint at the chance of a minor dip.. If so, on the topside, above 1.0020 would open the way to 1.0037 and then to 1.0065/70 and to 1.0100. Further out we are potentially looking at a run up to 1.0170 and even to the December 2016 high of 1.0343 albeit probably not for a while to come.

The short term momentum indicators could be hinting at a short term top, and if so, on the downside, support will be seen at minor levels 0.9965/35/15 ahead of the 1 May low of 0.9890. This looks unlikely right now but if wrong, on a break of 0.9890, further bids should arrive at 0.9870 and at 0.9845/50.

Buy US$Chf @ 0.9935. SL @ 0.9885, TP @ 0.1.0035.

Resistance Support
1.0099 May 2017 high 0.9965 Friday low
1.0067 (76.4% of 1.0343/0.9187) 0.9935 2 May low
1.0037 27 Oct 2017 high 0.9915 Minor
1.0021 Friday high 0.9890 1 May  low
0.9998 2 May high 0.9871 27 Apr low /30 Apr low


AUDUSD: 0.7540
Having seen a peak of 0.7560 in Asia on Friday, the Aud$ then turned heavy in Europe, and chopped around above 0.7500 for the balance of the session, finishing the week at 0.7540 requiring a cautious outlook at the start of the week.
1 hour/4 hour indicators: Turning higher Daily Indicators: Possible basing formation. Weekly Indicators:  Turning lower
Preferred Strategy:   The short term momentum indicators are slightly upbeat today underpinned by some mild bullish divergence but the longer term momentum indicators still look heavy, so looking to sell into any near term strength still seems to be the way to go.

If we do see a near term squeeze higher, minor resistance will be seen at 0.7550/60 and then again at 0.7575, ahead of the 26 April high at 0.7588 and 0.7600/05 although this looks rather doubtful to be seen again today selling rallies is preferred.

The longer term charts remains heavy and would seem to have further losses to come in the days ahead and a break of 0.7470 would then head towards minor support levels taking us down to 0.7400, although there really is not too much to hold it up ahead of the 1 June 2017 low at 0.7371.

Sell AudUsd @ 0.7580. SL @ 0.7610, TP @ 0.7475

Resistance Support
0.7603 (38.2% of 0.7813/0.7472) 0.7491 Friday low
0.7588 26 April high 0.7472/74 1 May  low /2 May low
0.7575 (23.6% of 0.7915/0.7472) 0.7425 Minor
0.7559/50 Friday high/(23.6% of 0.7813/0.7472) 0.7400 Minor
0.7540 200 HMA 0.7385 (76.4% of 0.7160/0.8135)

Economic data highlights will include:

M: AIG Performance of Construction Index, ANZ Job Ads, NAB Business Conditions/Confidence – Apr, China Foreign Exchange Reserves

T:  Retail Sales – Mar, China Trade Balance – Apr

W:  WBC Consumer Confidence – May

T: China CPI, PPI

F: Home Loans, Investment Lending for Homes – Mar



NZDUSD: 0.7023
 The Kiwi had a choppy session on Friday, trading a range of 0.6993/0.7052, finishing in the middle of the range and leaving the outlook a little mixed on Monday.
1 hour/4 hour indicators: Turning higher Daily Indicators:   Down-Possible basing formation. Weekly Indicators:  Turning lower
Preferred Strategy:   The Kiwi has closed back above 0.7000 at the end of the week, which seems likely to act as a pivot over the next few sessions.

On the topside, sellers will again be found on a bounce to 0.7050, beyond which allows for 0.7080 and then 0.7095/00, but probably not today.

On the downside, support will be again seen at 0.6980/90, below which would open the way to the December low at 0.6953. Under here, there is not much to hold the Kiwi up ahead of 0.6935 (76.4% of 0.6780/0.7438) and then 0.6910, long term rising trend support, which is where I think we are eventually heading break of 0.6900 would open up a move to 0.6815 and then to 0.6780

Sell NzdUsd @ 0.7070. SL @ 0.7115, TP @ 0.6955

Resistance Support
0.7130 Minor 0.6993 Friday low
0.7094 27 Apr high 0.6984 2 May low /03 May low
0.7080 (23.6% of 0.7395/0.6983) 0.6953 20 Dec low
0.7065 Minor 0.6935 (76.4% of 0.6780/0.7438)
0.7051/48 Friday high /200 HMA 0.6910 Rising trend support

Economic data highlights will include:

M:

T:

W:  Electronic Card Retail Sales – Apr

T: RBNZ Interest Rate Decision, Press Conference, Statement

F: Business PMI, Food Price Index – Apr