8 June: Forecast: FX: US$/Majors

By | June 8, 2017


EURUSD: 1.1257

EurUsd was highly volatile within a relatively tight range on Wednesday , trading  between 1.1202/82 and once again capped by the strong resistance at the channel top, but unable to break under good support at 1.1200, leaving the outlook unchanged ahead of the ECB.

For the time being, the top of the channel at 1.1285 is capping further upside progress, a break of which could take the Euro on to 1.1300, the November spike high. Beyond here could elicit a quick move higher, to where the points to watch are at 1.1365 (18 Aug high), 1.1427 (24 June high) and then at 1.1450 (major descending trend resistance).

The short term momentum indicators look neutral, while the dailies still look a little uncertain of any upside progress above the channel top, and back below 1.minor support at 1.1220 could then see a return to 1.1200. Back under 1.1200, would then allow for another test of 1.1160 and potentially of 1.1100/10, and further out, 1.1075 and 1.1040 are likely targets albeit that they are still some way off.

As before, while the dailies remain toppish, selling rallies at the top of the channel could still be  the plan, but with a tight SL placed above 1.1300. A daily close above 1.1300 would turn things around and would suggest the Euro is going to look for a test of 1.1400 and possibly 1.1500 at some stage.

It will all be about the ECB/Comey today, so until then best to be square.

24 Hour: Neutral Medium Term: Neutral
                                          Resistance Support
1.1365 18 Aug high 1.1220 200 HMA
1.1326 8 Sept high 1.1200/01 2 June Low / 1 June low/Session low
1.1300 9 Nov high 1.1163 31 May low
1.1284 Channel top/2 June high/7 June high 1.1108 30 May low
1.1270 Minor 1.1075 18 May low

Economic data highlights will include:

German Industrial Production, ECB Interest Rate Decision/Statement/Press Conference, US Monthly Budget Statement, Jobless Claims , James Comey testimony to Congress

USDJPY: 109.77

US$Jpy is a little higher after the release of  former FBI director James Comey’s statement suggesting  that he will say nothing new about Trump’s relationship with Russia, which has diminished the need for safe-haven demand ahead of his questioning by Congress, due later today.

Having bounced off the 109.10 low, this will now act as the initial support but below which there is only minor support for the dollar until 108.85. Below there we could easily revisit the early April low, just above 108.00 although the short term momentum indicators are pointing a little higher today and the dollar looks relatively underpinned. This could change very rapidly if Comey springs a surprise later in the session.

On the topside, minor resistance lies at the session high (109.87) ahead of 110.00 and then again at 110.30//40.  Further out, 110.70 and 111.00/10 will be hurdles although this seems unlikely to be seen today.

With the dailies seemingly picking up some downside momentum, selling rallies is preferred although the short term momentum indicators do hint that we could see a test of 110.00/35 ahead of any further downside tests.

24 Hour: Mildly Bullish Medium Term: Prefer to sell rallies
                                         Resistance Support
111.11 (38.2% of 114.36/109.10) 109.10 6 June low
111.00 Minor 108.87 21 April low
110.72 5 June high 108.32 18 April low
110.33/40 (23.6% of 114.36/109.10) /200 DMA 108.12 17 Apr low
110.00 Minor 107.80 (61.8% of 98.94/118.66)

Economic data highlights will include:

Japan GDP, Foreign Bond/Stocks Investment, Current Account, Trade Balance, Eco Watchers Survey

GBPUSD: 1.2957

Cable has chopped around within a range of 1.2886/2967 while waiting for the UK election, at which it appears the Conservatives will win with a reduced majority, but which could still elicit a move higher to test 1.3000+. If the majority is only slim though, then Cable will head in the opposite direction, probably to test the recent 1.2750 lows – and possibly a lot lower. The ECB will also have an influence and there will be plenty of action going on through the cross, where EurGbp currently sits at 0.8700.

The immediate points to watch are unchanged, and on the downside the initial support will arrive at 1.2875/85 and at 1.2855. Back below 1.2830 would retest 1.2800 and the 31 May low of 1.2768, albeit probably not today. If wrong, under here could revisit minor support at 1.2750/55 but a break of which there is little to hold Cable up until 1.2685/90.

On the topside, Cable reached 1.2967 in Europe but was unable to carry on and instead it is sitting close to 1.2900 after some choppy trade. A break higher could lead 1.3000, and a possible retest of 1.3015 and eventually 1.3047. Good resistance lies at the descending trend resistance at around 1.3075, but a break of which could see an acceleration towards 1.3300.

Stay square for now.

24 Hour: Neutral Medium Term:  Neutral
                                         Resistance           Support
1.3047 18 May high 1.2930 Minor
1.3015 25 May high 1.2886 Session low
1.3000 Psychological 1.2854 5 June low
1.2980 (76.4% of 1.3047/1.2768) 1.2829 1 June low
1.2967 Session high 1.2768 31 May low

Economic data highlights will include:

UK General Election

USDCHF: 0.9642

US$Chf has had a rangebound session (0.9616/0.9677) leaving the outlook unchanged, with all eyes now on the ECB meeting.

On the downside, below 0.9615, there is little to hold the dollar up until 0.9590/0.9600, with the more important level being at the November spike low at 0.9550, roughly where the 200 WMA also lies.

On the topside, back above the 100 MMA – which may continue to act as a bit of a magnate – sellers will be seen at minor levels of 0.9765/75 ahead of 2 June’s high of 0.9719 although I doubt that we see that again today. The short term momentum indicators have turned a little higher today, suggesting a neutral stance and the 100 MMA at 0.9640 may continue to attract while waiting on today’s ECB outcome.

24 Hour: Neutral Medium Term: Neutral
                                         Resistance Support
0.9727 (23.6% of 1.0099/0.9613) 0.9613/16 6 June low /Session low
0.9719 1 June high /2 June high 0.9600 Minor
0.9705 200 HMA 0.9575 Minor
0.9677 Session high 0.9549/40 9 Nov low/200 WMA
0.9640 100 MMA 0.9517 22 June 2016 low

Economic data highlights will include:


AUDUSD: 0.7548

The Aud has been firm ever since the better than expected GDP outcome yesterday, having traded to 0.7565 before settling the day at 0.7550, right on the 100 DMA.

Technically, the short-term momentum indicators are now mixed with the hourlies now pointing lower, while the 4 hourlies are pointing strongly higher but are in extreme overbought territory. The dailies are picking up some mildly positive momentum though and on the topside, if we can make further progress above the session high, we could then head on to 0.7585 and then towards 0.7600/0.7610 although I am doubtful that we get here today.

On the downside, the initial bids will arrive at the minor rising trend support at around 0.7535, ahead of the 200 HMA at 0.7525. This area looks fairly well underpinned right now but a downside break would trigger some short term stops and may produce a trip back towards 0.7490/0.7500, below which could revisit 0.7465/70 and even 0.7445/50.

24 Hour: Prefer to sell rallies Medium Term: Neutral
                                         Resistance                                         Support
0.7611 17 Apr high 0.7535 Rising trend support
0.7600 Minor 0.7525 200 DMA
0.7588 (61.8% of 0.7750/0.7328) 0.7490 (38.2% of 0.7372/0.7565)
0.7565 Session high 0.7468 (50% of 0.7372/0.7565)
0.7555 100 DMA 0.7445 (61.8% of 0.7372/0.7565)

NZDUSD: 0.7191

The Kiwi again made it up to 0.7205, which has so far capped it, although it currently sits not too far away, at 0.7195.

The 4 hour/daily momentum indicators still look positive and as we said yesterday, further gains would take the Kiwi beyond 0.7200/05 and on towards 0.7240 and to 0.7300, beyond which there is little to stop it heading on towards 0.7370. It is too early for that scenario but as we said before, note that the Kiwi finished May by making a key-monthly bullish reversal, which possibly does hint at further gains through 2017.

The 4 hour indicators are hinting at some bearish divergence though, and on the downside the initial support lies at 0.7165 and 0.7150, ahead of the 0.7125 6 June low and 0.7110/15. Below 0.7090 would allow a return to minor 0.7050/60 and, further out, support levels would be seen at the 30 May low of 0.7035 and at 0.7000 a break of which could take us back to the 24 May low of 0.6988.

While looking bid in the short term, I would once again be tempted to look to sell into strength at around 0.7200/15, with a tight SL placed above 0.7230. A break and daily close above 0.7200, would change the ball game and could prompt an acceleration to the topside.

24 Hour: Neutral Medium Term: Prefer to sell rallies – tight SL
                                         Resistance Support
0.7300 Minor 0.7168 Session low
0.7265 Minor 0.7150 Minor
0.7247 23 Feb high 0.7113 5 June low /(23.6% of 0.6817/0.7204)
0.7230 (61.8% of 0.7485/0.6817) 0.7090 200 HMA
0.7204/05 6 June high /Session high 0.7056 (38.2% of 0.6817/0.7204)