8 Dec: Forecast: FX: US$/Majors + trade ideas

By | December 8, 2017


EURUSD: 1.1773
€/Usd is lower at the ends of Thursday’s session as the dollar remains strong amid optimism that the U.S. tax reform bill will pass by the end of the year. Finishing near the lows of 1.7770, we will now await the release of the NFP later today. The Euro also looks set to stay under pressure from selling in EurGbp and this could mean limitations on the upside against the dollar.
1 hour/4 hour indicators: Turning lower Daily Indicators: Possible topping formation Weekly Indicators:  Neutral
Preferred Strategy:  The short term momentum indicators look a little heavy again on Friday, so selling rallies and staying long dollars (short Euro) is preferred as we head into the NFP.  I remain fairly neutral on the pair although the daily charts, which had been leaning higher do now appear to be turning lower and may be hinting of further dollar strength ahead. Look to trade 1.1740/1.1810 today ahead of the jobs numbers, with a bias towards heading to 1.1700 later in the day.
Resistance Support
1.1890 Chart Gap 1.1775 55 DMA/Session low
1.1877 4 Dec high 1.1755 (50% of 1.1553/1.1943)
1.1847 6 Dec high 1.1707 (61.8% of 1.1553/1.1943)
1.1814 Session high 1.1685 Rising trend support
1.1800 100 DMA 1.1650 (76.4% of 1.1553/1.1943)

Economic data highlights will include:                                                                                

German Trade Balance, US Jobs/NFP/Average Hourly Earnings

USDJPY: 113.10
US$Jpy is back above 113.00, accelerating higher at the end of the US session on hope of a solid NFP report later today.
1 hour/4 hour indicators: Up Daily Indicators: Turning higher Weekly Indicators:  Neutral
Preferred Strategy:  The dollar looks pretty firm on all fronts now and trading from the long side is preferred, with a solid NFP reading likely to see a test of 113.30 and possibly 114.00. A poor number would have us back at 112.00 and a break of strong support at 111.60 may lead to stops being triggered and lead the dollar back towards 110.85/111.00 although I don’t see it happening today.
Resistance Support
114.06 9 Nov high 112.50 100 HMA
113.80 (76.4% of 114.73/110.83) 112.21 Session low
113.50 Minor 111.98 6 Dec low
113.20 (61.8% of 114.73/110.83) 111.60/65 100 DMA/200 DMA
113.08 4 Dec high /Session high 111.35/39 29 Nov low /1 Dec low

GBPUSD: 1.3470
After a quick dip to 1.3319, Cable rallied strongly on the positive Brexit headlines regarding the Irish border, and if further progress is made then we may see a test of 1.3550 or even 1.3650.
1 hour/4 hour indicators: Up Daily Indicators: Turning higher?                                                                     Cable fell to a 1-wk low at 1.3358  amid Brexit uncertainty, ending NY 1.3375 Weekly Indicators:  Turning higher?
Preferred Strategy:  It looks set to remain choppy for Sterling, with Brexit headlines likely to guide the direction, although right now it all looks quite positive so I prefer to trade from the long side, particularly in the crosses, i.e. long GbpAud, short EurGbp.  Watch for the UK data later today…it could be a busy session for Cable.
Resistance Support
1.3595 22 Sept high 1.3430 Minor
1.3549 1 Dec high 1.3380 Minor
1.3538 4 Dec high 1.3319 Session low
1.3500 Minor 1.3295 (50% of 1.3038/1.3549)
1.3484 Session high 1.3280 Minor

Economic data highlights will include:

Manufacturing/Industrial Production, Trade Balance, NIESR GDP Estimate

USDCHF: 0.9945
US$Chf has traded up to resistance at 0.9945 and looks set to head higher in coming days – depending on the NFP figure.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:  Neutral
Preferred Strategy:  With both the short term and daily momentum indicators looking constructive we could see a run back to 1.0000 and possibly to 1.0040.
Resistance Support
1.0037 1 Nov high 0.9900 Minor
1.0015 Minor 0.9872 Session low
1.0000 Psychological 0.9854 6 Dec low
0.9965 (76.4% of 0.1137/0.9816) 0.9835 100 WMA /5 Dec low
0.9946 21 Nov high/Session high 0.9805 200 DMA

AUDUSD: 0.7510
AudUsd is trading heavy after the softer than expected data of the least few days and seems set to test support at 0.7480, below which would allow a run towards 0.7400. Today’s slide was assisted by slides in copper & iron-ore futures and helped the Aud to reach the low of 0.7504.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning lower? Weekly Indicators:  Turning lower
Preferred Strategy:  Trading from the short side continues to be the plan ahead of next week when the Fed is expected to hike rates. I therefore suspect that further upside for the Aud will be limited and selling into rallies is still preferred. Note that the China CPI is due tomorrow and could impact on the Aud and Monday’s open.

Sell AudUsd @ 0.7540. SL @ 0.7580, TP @ 0.7470

Resistance Support
0.7600 Minor           0.7504 Session low
0.7585 100 HMA/200 HMA 0.7480 Rising trend support
0.7570 Minor 0.7450 Minor
0.7540 100 WMA 0.7415 Minor
0.7530 Minor 0.7400 Minor

Economic data highlights will include:                                                                           

Home Loans, Investment Lending for Homes, China Trade Balance

NZDUSD: 0.6829
The Kiwi is being pulled down by the soft Aud$ and it would seem that the indicators suggest lower levels ahead.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning Neutral Weekly Indicators:  Turning lower
Preferred Strategy:  The short term momentum indicators are turning slightly lower and selling rallies is preferred today. The dailies are neutral but with the weeklies looking heavy I suspect that we will see another leg to the downside, where 0.6780/6800 would provide decent support, but below which would open the way to sub 0.6700. For today, a range of 0.6780/0.6850 might cover it.
Resistance Support
0.6945 28 Nov high 0.6823 Session low
0.6933 (23.6% of 0.7434/0.6783) 0.6816 1 Dec low
0.6928 29 Nov high 0.6779 17 Nov low
0.6916 6 Dec high 0.6750 Minor
0.6885 Minor 0.6720 Minor

Economic data highlights will include:

Q3 Manufacturing Sales