31 Jan: Forecast: FX: US$/Majors + trade ideas

By | January 31, 2018


EURUSD: 1.2397
EurUsd has ended back at 1.2400 after a choppy day, initially falling to 1.2334 before a strong bounce to 1.2453. We now await Trump and then later in the day the FOMC outcome. Until then stay nimble.
1 hour/4 hour indicators: Neutral Daily Indicators: Up Weekly Indicators:  Turning higher
Preferred Strategy:  With the short term momentum indicators now in neutral a cautious stance seems wise although the longer term dollar downtrend does remain intact. A run back towards the session low of 1.2335 could seem possible, below which there is Fibo support at 1.2305. A break of 1.2300 would then allow a move towards 1.2225 although possibly not today.

With the daily/weekly charts still looking positive though, any weakness may be short lived and buying any dips may still be the medium term trade.  The session high of 1.2453, along with the 100 MMA/200 MMA will provide stiff resistance, but above 1.2500 would then target 1.2538, beyond which would open 1.2650. In the meantime, wait for Trump, coming up around midday in Asia, and then later in the day, the FOMC meeting.

Resistance Support
1.2538 25 Jan high 1.2360 Minor
1.2500 (38.2% of 1.6037/1.0340) 1.2336/34 29 Jan/Session  low
1.2460 100 MMA 1.2317 200 HMA
1.2453 Session high 1.2305 (23.6% of 1.1553/1.2537)
1.2425 200 MMA 1.2270 Minor

Economic data highlights will include:

Donald Trump State of the Union Speech, German Retail Sales, Unemployment, EU Unemployment, CPI, Chicago Purchasing Managers Index, Pending Home Sales, FOMC Meeting/Interest Rate Decision.

USDJPY: 108.85
US$Jpy attempted to break back into the weekly cloud, but failed at 109.20 and fell back to 108.40 before a mild bounce heading into the close, currently at 108.80, while waiting for Donald Trump to speak at around the Asian lunchtime.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Neutral
Preferred Strategy:  The short term momentum indicators are still looking a little more positive and if 109.20 can be overcome, look for a run back towards 109.70/80 and possibly onto 110.00.

The longer term charts still look heavy though and it may be that we do see a return towards the session low of 108.40, below which would head to the 26 Jan low of 108.27. A break of this would then find little to hold the dollar up until rising trend support at 107.50 and the 2017 low at 107.32.

Allowing for a dip, the short term momentum indicators do suggest that today we should be looking to buy into weakness, but with a tight SL in place although I would wait for Donald Trump to speak.

Resistance Support
110.00 200 HMA 108.40 Session low
109.76 26 Jan high 108.27 26 Jan low
109.47 (23.6% of 111.38/108.27) 108.00 Minor
109.19 Session high/29 Jan  high /Weekly cloud base 107.80 Minor
109.00 Minor 107.45 Rising trend support

Economic data highlights will include:

Industrial Production, Construction Orders, Housing Starts

GBPUSD: 1.4144
Sterling had a rollercoaster session, tripping stops below 1.4000. trading down to 1.3980 before rallying strongly on increased hopes of a UK rate rise and underpinned by BOE Governor, Mark Carney saying that  the Bank is turning its sights to tackling inflation.
1 hour/4 hour indicators: Neutral Daily Indicators: Up Weekly Indicators:  Up
Preferred Strategy:  Cable is very choppy and probably best left alone right now. It would seem to be roughly in a range of 1.4000/1.4300 so look to trade that, with a tight 50 point stop placed either side.
Resistance Support
1.4300 Minor 1.4100 Minor
1.4287 26 Jan high 1.4060 200 HMA
1.4240 Minor 1.4035 (23.6% of 1.3039/1.4344)
1.4200 Minor 1.4000 Minor
1.4165 Session high /100 HMA 1.3980 Session low

Economic data highlights will include:                                                                                                                         

Consumer Confidence

USDCHF: 0.9347
US$Chf has had a choppy session and is ending the day a little lower, albeit without any major change in the outlook.
1 hour/4 hour indicators: Turning higher Daily Indicators: Down Weekly Indicators:   Turning lower
Preferred Strategy:  As before, the longer term charts look heavy, and if the support at 0.9288 does get taken out we could head quickly to the August 2015 low at 0.9257, below which there is a black hole until around 0.9150.

The shorter term charts though look a little more positive though,  and on the topside, resistance will again be seen at 0.9380/90, a break of which could see the dollar carry on to the  26 Jan high 0.9430. Given the momentum of the 4 hour charts buying dips for the next 24 hours is preferred.

Resistance Support
0.9475 Minor 0.9325 Minor
0.9452 (23.6% of 0.9977/0.9288) 0.9310/03 Session low/ 26 Jan low
0.9430 26 Jan high 0.9288 25 Jan low
0.9392 Session high 0.9257 Aug 2015 low
0.9375 Minor 0.9210 Minor

Economic data highlights will include:                                                                                                 

Trade Balance

AUDUSD: 0.8081
 AudUsd fell to a session low of 0.8041 in Europe but has since recovered, to currently sit at 0.8080 while awaiting the outcome of the Q4 CPI (exp 0.7%mm, 2.0%yy; Trimmed Mean, exp 0.5%mm, 1.9%yy), which will be followed by the NBS China Mfg & Non-Mfg PMIs.
1 hour/4 hour indicators: Turning lower Daily Indicators: Up – Becoming Overbought Weekly Indicators:  Neutral – Turning higher
Preferred Strategy:  After a choppy session on Tuesday, we now await the next directional move, likely to come via the CPI. Technically, the longer term uptrend remains intact and back above 0.8100 and the recent high of 0.8135 could then see a move towards the May 2015 high. If that (0.8162) is taken out then we might expect to see a run towards 0.8200 and higher, with little resistance seen until 0.8245/90. The 4 hour charts are pointing lower though and warn of a possible correction lower although good buying interest should again be seen at around 0.8040/55. Below there though, would test the rising trend support and would open the chance of a run towards 0.7985.Sidelined.
Resistance Support
0.8180 Minor 0.8070 Minor
0.8162 May 2015 high 0.8055 200 MMA
0.8150 Minor 0.8040/35 Session low/Rising trend support
0.8135 26 Jan high 0.8004 26 Jan low
0.8117/13 29 Jan  high /Session high 0.7985 Minor

Economic data highlights will include:

Private Sector Credit, CPI, China Mfg/Non-Mfg PMIs

NZDUSD: 0.7327
The Kiwi is pretty much unchanged today at 0.7325, although it did briefly break the rising trend support and fell to the Fibo support at 0.7279 before a swift bounce.
1 hour/4 hour indicators: Neutral Daily Indicators:  Possible topping formation. Weekly Indicators:  Turning higher
Preferred Strategy:   As before, the daily charts remain positive but look increasingly toppish, and selling rallies may now be the plan, although if the US$ remains under pressure it may be better to trade it through the crosses, possibly against the Aud?  Against the US$, the Kiwi needs to hold above 0.7280/90, below which would break below the rising trend support, possibly signalling that a longer term top is in place and opening the downside towards 0.7185/0.7215. On the topside, resistance will be seen at the recent highs between 0.7355/95, but above which could see a run back towards 0.7435.
Resistance Support
0.7434/30 20 Sept high/25 Jan high 0.7300 Minor
0.7392 25 Jan high 0.7290 26 Jan low /Rising trend support
0.7374 26 Jan high 0.7279 Session low/(23.6% of 0.6780/0.7433)
0.7363 29 Jan  high 0.7260 Minor
0.7354 Session high 0.7235 Minor