9 Apr: Forecast: FX: US$/Majors + trade ideas

By | April 9, 2018

 

EURUSD: 1.2280
EurUsd is slightly higher at the end of the week following a wild ride after the mixed messages from Friday’s US jobs data, finishing near the top end of the 1.2215/90 range. The Sentix and German Trade Balance will be today’s focus.
1 hour/4 hour indicators: Turning higher Daily Indicators: Neutral -Turning lower? Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The Euro made a new minor-trend low at 1.2215 on Friday, before bouncing to close near session highs, and with the short term momentum indicators looking more constructive today we may yet be in for another test of 1.2300. If we get above here, nearby resistance will be seen at the 4 Apr high of 1.2315, the 3 April high of 1.2335 and at the 2 Apr high at 1.2345. Further out, a stronger Euro would target 1.2370, 1.2420 and even 1.2470, but seems unlikely for a while at least.

On the downside having tried and failed to break below the major rising trend support trend support (now at 1.2245) in trading down to 1.2215, this area will remain strong support. This looks likely to hold today although a break could then head towards Fibo support at 1.2170 and the 100 DMA at 1.2150. Below there would target 1.2085 and possibly 1.2025.

Given the speculative long Euro positioning, I still mildly prefer the downside and would look to sell rallies although the growing concerns over the chance of a fully blown trade war are likely to limit any major dollar gains, so unless the US data begins to heat up soon we are likely to just chop around within the existing range- Something like 1.21/1.24 – but going nowhere fast. US CPI in focus this week – Wed. Note also that US$Chf made a bearish key day reversal which may be a clue as to the direction for the next couple of days….. we shall see.

Resistance Support
1.2475 27 Mar high 1.2245 Rising trend support
1.2345 2 Apr high/200 HMA 1.2215 Friday low
1.2335 3 April high 1.2170 (38.2% of 1.1553/1.2555)
1.2315 4 Apr high 1.2154 1 March low/100 DMA
1.2290 Friday high 1.2110 Minor

Economic data highlights will include:

M: German Current Account, Trade Balance, EU Sentix Investor Confidence Survey

T:  US NFIB Business Optimism Index, PPI, Wholesale Inventories, API Weekly Crude Oil Stock Inventory

W:  ECB Non-Monetary Policy Minutes US CPI, Monthly Budget Statement, EIA Crude Oil Stocks Weekly Change

T: ECB Monetary Policy Minutes, Industrial Production, US Jobless Claims, Import/Export Index

F: German CPI/HICP, EU Trade Balance, US Preliminary Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count



USDJPY: 106.95
Having run into the daily cloud base at the end of last week, US$Jpy was then weighed down by the escalating trade war threats and the weak NFP outcome, in falling back to a low of 106.77 before closing the week just under 107.00.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:  While the daily momentum indicators retain a constructive bias, the short term charts look heavy today, and some choppy trade, possibly testing slightly lower levels may lie in store for the coming session. If so, minor support will be seen today at the Thur/Fri lows of 106.70/77. Below there could see a reverse towards 106.40, 106.00, and possibly towards the 3 April low of 105.68 although this seems unlikely right now.

The daily indicators generally still look constructive and if we can take out the resistance at 107.45/50 then we could see an approach on the mid-February highs at 107.67/90.  108.00/10 would then be a target above which could see a move to 108.45/50.

Further out, if stocks do increase their downside momentum, taking US$Jpy along for the ride, a move back below the 200 MMA (105.60) would open the way to 105.30, a break of which would allow a return to 104.60. Below that, there is little to support the dollar until 103.50 – This currently looks well beyond the horizon and overall I prefer to be trading from the long side.

Resistance Support
108.10 (38.2% of 113.75/104.60) 106.77/70 Friday low /5 Apr low
107.90 21 Feb high 106.40 200 HMA /(38.2% of 104.60/107.48)
107.67 27 Feb high 106.15 Minor
107.48/45 5 Apr high/Friday high  /Daily cloud base 105.98 4 Apr low
107.15 Minor 105.70/68 (61.8% of 104.60/107.48)/3 Apr low

Economic data highlights will include:

M: Japan Current Account, Trade Balance, Eco Watchers Survey, Consumer Confidence

T:

W:  Machinery Orders

T:

F:



GBPUSD: 1.4087
Cable traded higher, outperforming the other majors on Friday, on the back of the US$ weakness, the NFP miss, lower US yields and some selling of EurGbp cross.
1 hour/4 hour indicators: Turning higher Daily Indicators: Neutral -Turning lower? Weekly Indicators:  Turning Neutral
Preferred Strategy:   Cable had a good day on Friday, and after some choppy trade it headed sharply up from the European lows of 1.3983 to a high of 1.4105. In doing so it briefly took out the recent highs and tripped some stops above 1.4100.

The short term charts hint at a bull flag, which would have a target of somewhere around 1.4200 although ahead of that we will see offers at 1.4135/40 and at 1.4175. A break of 1.4200 would allow a return to the 27 Mar high of 1.4243 although that remains out of reach on Monday.

On the downside, minor support will be seen at 1.4050/60 ahead of the 1.4000 pivot and the recent lows in the 1.3965/75 area.

Overall, while I mildly prefer the topside today, the longer term charts are giving little clue either way so I suspect more choppy trade within the wide 1.3950/1.4250 area could dominate for the coming week.

Resistance Support
1.4200 28 Mar high 1.4060 200 HMA
1.4175 (76.4% of 1.4243/1.3965) 1.4030 Minor
1.4160 Minor 1.4000 Pivot
1.4137 (61.8% of 1.4243/1.3965) 1.3983/77 Friday low /(50% of 1.3715/1.4243)
1.4105 Friday high /(50% pivot of 1.4243/1.3965) 1.3965 5 Apr low /Daily cloud top/Daily Kijun

Economic data highlights will include:

M:

T:  BRC Like for like Retail Sales, NIESR GDP Estimate

W:  Manufacturing/Industrial Production, Goods Trade Balance, Trade Balance

T: BOE Credit Conditions Survey

F:



USDCHF: 0.9590
US$Chf lower on Friday, unable to overcome the various levels of strong resistance above 0.9650 and closed the week back to 0.9590, having made a bearish key day reversal.
1 hour/4 hour indicators: Turning lower Daily Indicators: Possible topping formation. Weekly Indicators:   Neutral
Preferred Strategy:  The short term momentum indicators look heavy today and a test of the downside would not surprise, with points to watch being at 0.9575/80 ahead of the 4 Apr low of 0.9550. Below there would head back to 0.9525/30 and to 0.9500/05.  Below 0.9500 would open the way back to 0.9460 although at this stage it seems unlikely.

The longer term momentum indicators still look mildly constructive but resistance remains solid at the 200 DMA and then at the 200 WMA (0.9680). Ahead of that though, minor resistance will arrive today at 0.9610/15 and may be a sell on rally, if we get there, for a short term trade, looking for a dip towards 0.9530/40.

Resistance Support
0.9680 200 WMA/Weekly cloud base 0.9578 Session low
0.9666 18 Jan high 0.9550 4 Apr low
0.9652 200 DMA 0.9532 (23.6% of 0.9187/0.9596)
0.9648 Friday high 0.9526 2 Apr low
0.9610 Minor 0.9500 Minor


AUDUSD: 0.7674
The Aud closed pretty much where it opened the day at around 0.7675, unable to hold on to the spike gains to 0.7700 seen after the NFP.
1 hour/4 hour indicators: Neutral Daily Indicators: Neutral Weekly Indicators:  Neutral
Preferred Strategy:   The short term momentum indicators are once again in neutral on Monday, so a cautious stance is required. Resistance will again be seen at 0.7700, at 0.7720/25 and at 0.7745/50. Above there could stretch back to the 0.7770/85 band, which should be strong, but above which would open 0.7800/05.

If we head back below  0.7660/70, the Aud has recently found a base in the 0.7645/50 range, and this needs to be taken out in order to allow further downside progress towards the next major level, at 100 WMA (0.7625). Below this would then move towards the major rising trend support from January 2016, at 0.7590, although that may take a while.

Sell AudUsd @ 0.7700 SL @ 0.7730, TP @ 0.7625

Resistance Support
0.7785/79 200 MMA/21 Mar high /(50% of 0.7916/0.7642) 0.7657 Friday low
0.7770 100 DMA 0.7651/47 (76.4% of 0.7501/0.8135)/ 3 April low
0.7746 (38.2% of 0.7916/0.7642) 0.7645/42 (50% pivot of 0.7160/0.8135)/29 Mar low
0.7725 5 Apr high 0.7625 100 WMA
0.7700 Friday high 0.7600 Minor

Economic data highlights will include:

M: AIG Performance of Construction Index

T:  NAB Business Conditions/Confidence, China Money Supply

W:  WBC Consumer Confidence, China CPI

T: Consumer Inflation Expectation, Investment Lending for Homes, Home Loans

F: Financial Stability Report, China Trade Balance



NZDUSD: 0.7272
 As with the Aud, the Kiwi traded a fairly tight range but spiked higher following Friday’s US jobs data, eventually reaching 0.7282 before closing the week at 0.7270.
1 hour/4 hour indicators: Neutral Daily Indicators:  Neutral Weekly Indicators:  Turning Neutral
Preferred Strategy:   The momentum indicators have all turned neutral at the start of the week, so a cautious approach is required.

Overall, I still prefer the downside in the medium term although with the dailies being neutral I am not expecting too much.

The hourly momentum indicators do look mildly positive though and on the topside, back above 0.7280, resistance will be seen at 0.7300, above which there is not a lot to stop a return to 0.7330, ahead of the March high of 0.7354 and then to the Fibo level at 0.7370.

On the downside the initial support will be seen at 0.7245/55.  Below there would allow 0.7225 ahead of stronger bids likely to arrive at 0.7195/0.7200. Below 0.7195 would allow a run to 0.7185 and then, further out, to 0.7150/55, 0.7140 and 0.7110 would attract.

Neutral.

Resistance Support
0.7354 13 Mar high 0.7255 Minor
0.7328 (61.8% of 0.7436/0.7153) 0.7242 Friday low
0.7322 5 Apr high 0.7225 Minor
0.7300 Pivot 0.7194 3 April low
0.7282 Friday high 0.7185/87 200 DMA /28 Mar low/Rising trend support

Economic data highlights will include:

M:

T:

W:  NZIER Business Confidence

T: Electronic Card Retail Sales

F: Business PMI