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

By | November 9, 2017


EURUSD: 1.1596
Preferred Strategy:  EurUsd has had another tight session hugging 1.1600 and it could be the same again today although the China Oct inflation data could impact risk sentiment in Asia, while Trump headlines from China might create some waves. Otherwise there is little to drive markets again for the coming session.

In the short term, the momentum indicators are flat and offer little hint in either direction although the 4 hour charts may be pointing to slightly higher levels and a run towards 1.1630 would not really surprise.

On the downside, support will be seen at and 1.1358 and at 1.1550 and then again at 1.1500/10 below which there is little support until 1.1475/80.

As before, as long as the Euro should hold below 1.1675 on a daily-close basis, with the eventual target being at around 1.1250, pretty much in line with the 200 DMA and if we do see a daily close below 1.1570 at any stage we may begin to see an acceleration to the downside, to where 1.1510 will be the next support.

A topside break of 1.1675 would trigger stops and could see a run back to 1.1700 where the 100 DMA will provide stern resistance, but above there could see a bigger squeeze towards 1.18000. At this stage this looks doubtful. As long as we don’t see a daily close above 1.1700, I prefer to trade from the short side.

Sell EurUsd @ 1.1670 & @ 1.1700. SL @ 1.1730, TP @ 1.1500.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
FX Charts Position: Short  – Looking  to add to the position into strength
Resistance Support
1.1686/90 3 Nov high /(38.2% of 1.1879/1.1574) 1.1578 Session low/Rising trend support
1.1675 H.S. Neckline 1.1553 7 Nov low
1.1623/30 6 Nov high (23.6% of 1.1879/1.1653) 1.1525 Minor
1.1615 7 Nov high 1.1510 Rising trend support/(38.2% of 1.0570/1.2091)
1.1610 Session high 1.1478 20 July low

Economic data highlights will include:

German Current Account, Trade Balance, EU Economic Bulletin/Growth Forecasts, US Wholesale Inventories, Jobless Claims

USDJPY: 113.79
Preferred Strategy:  US$Jpy slipped to a low of 113.38 on Wednesday before a recovery to sit at 113.85 into the NY close, leaving the bigger picture outlook unchanged.

The short term technical outlook also remains unchanged, and the charts look mixed/flat so a fairly nimble stance is required, with further choppy trade either side of 114.00 looking possible over the next couple of days.

On the downside, support will be seen at 113.50, below which could then head back to the session low, to the daily Kijun at 113.20 and then at the Fibo level at 112.95 although this seems unlikely today. If wrong, a sustained break of 113.00 would see us back in the previous 112/113 range, where 112.75 would be the first level of support ahead of 112.30.

On the topside, minor resistance now lies at 114.00, above which could return to 114.35/45 and above, towards the 114.73, 6th Nov high, but above which could see a test of the descending trend resistance, currently at around 114.90. A break of 115.00 would then see little resistance until 115.20 and then 115.50.

I remain fairly neutral, although I still like the dollar in the medium term and prefer to buy dips.

24 Hour: Prefer to buy dips Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
114.95 Descending trend resistance 113.50 Minor
114.73 6 Nov high 113.38 Session low
114.45 Minor 113.20 Daily Kijun
114.33 7 Nov high 112.95 31 Oct low/(23.6% of 107.31/114.73)
114.01 Session high 112.70 Minor

Economic data highlights will include:                                                                    

Trade Balance, Current Account, Tertiary Industry Index, Eco Watchers Survey, Machine Tool Orders

GBPUSD: 1.3115
Preferred Strategy: Sterling is heavy today on the back of the growing political uncertainties in the UK, with Theresa May’s position beginning to look rather precarious because of the inability to make headway in the Brexit talks.

The momentum indicators remain in neutral, so a cautious stance is required and further choppy trade near current levels would not really surprise although a break of the session low of 1.3085 would then allow a move to the previous lows at around 1.3030 and then to 1.3000.

On the topside, resistance will be seen at 1.3150 and again at 1.3175. Above here looks unlikely, but if wrong, look for a move back to 1.3200+, possibly towards 1.3225/50.

24 Hour: Neutral Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
1.3250 (76.4% of 1.3320/1.3042) 1.3085/80 Session low/100 DMA
1.3235 Minor 1.3060 Rising trend support
1.3215 (61.8% of 1.3320/1.3042) 1.3038 3 Nov low
1.3175/80 Session high /(50% of 1.3320/1.3042) 1.3026 6 Oct low
1.3150 Minor 1.1.2995 (61.8% of 1.2588/1.3656)

Economic data highlights will include:

NIESR GDP Estimate

USDCHF: 1.0000
Preferred Strategy: US$Chf had another choppy session, (0.9980/1.0006) and has again finished the day at parity.

The short-term momentum indicators are neutral, while the dailies are looking slightly heavy and may signal a minor decline towards the session lows, a break of which could see a run towards support at 0. 9940/50 and then again at 0.9890/9900 over the coming days although I don’t think we head back here today.

With the weekly momentum indicators generally looking positive though, further dollar strength could be in store down the track and if we can take out 1.0015/25, we could then head on to take another look at 1.0035/40. Above this there is little to hold the dollar up ahead of 1.0100, and beyond that to 1.1025 and 1.0170.

For now, look for the dollar to chop around current levels and possibly to head a little lower, but with the view of buying dips for an eventual move towards 1.1000+.

Buy US$Chf @ 0.9960. SL @ 0.9885, TP @ 1.0085.

24 Hour: Mildly Bearish – Prefer to buy dips Medium Term: Prefer to buy dips
FX Charts Position: Long – Looking to add on dips.
Resistance Support
1.0123 (76.4% of 1.0343/0.9420) 0.9980 Session low
1.0099 11 May high 0.9968 7 Nov low
1.0036/37 27 Oct high /1 Nov high 0.9941 31 Oct low
1.0028 6 Nov high 0.9920 Minor
1.0006 Session high 0.9890 (23.6% of 0.9420/1.0037)

Economic data highlights will include:


AUDUSD: 0.7679
Preferred Strategy: The Aud has had a solid session, underpinned by higher base metal prices, although it remains well within its recent range below 0.7700 and would appear to have more of the same ahead of it unless the China CPI springs any major surprise.

While the short term momentum indicators look mildly supportive for a possible squeeze up towards 0.7700+, the longer term charts still look heavy and a break of 0.7625 would bring fresh selling, which could then see a run towards 0.7600 and eventually to 0.7570. Direction today will come from the Home Loans and China CPI although there is little out apart from that and it may be another  day of consolidation within the 0.7625/7700 area.

Overall, with the longer term charts looking heavy, I suspect the Aud$ is building a bear flag and is biding its time ahead of a more sustained test of 0.7625/30, which could then take us to 0.7570 and eventually towards 0.7400, but patience will be required and we look likely to see better levels to sell it than we are currently trading at.

Note that the Kiwi is squeezing higher following the RBNZ Meeting and could drag the Aud$ with it.

24 Hour: Neutral  – Prefer to sell rallies Medium Term: Neutral –Mildly Bearish
FX Charts Position:   
Resistance Support
0.7738 Descending trend resistance 0.7626/30 7 Nov low (61.8% of 0.7328/0.8124)
0.7729 2 Nov high 0.7624 27 Oct low
0.7715 Minor 0.7600 Minor
0.7700 200 DMA/7 Nov high 0.7585 Minor
0.7684 Session high 0.7570 7 July low

Economic data highlights will include:

Investment Lending for Homes, Home Loans, China CPI, PPI

NZDUSD: 0.6949
Preferred Strategy: The Kiwi has spiked up to 0.6963 after the RBNZ left rates on hold but now sits back at 0.6945 in quiet trade.

With the daily charts still looking mildly positive, further positive momentum could take the Kiwi back towards 0.6965/75 and then back to 0.7000 although this may be a step too far unless the US$ comes under some pressure of its own.

On the downside, minor support now lies at 0.6920 ahead of 0.6900. A move back below 0.6890 could see a retest of 0.6875, below which could then see a return to 0.6850. Under there would find strong support at 0.6830 and again at 0.6817, where we have the double bottom with the May low. Below that though would then find that there is little support ahead of 0.6670 although I don’t think we head anywhere close for the time being.

Overall, with the longer term charts looking heavy, I suspect the Kiwi is currently biding its time ahead of a more sustained test of the recent lows, but patience will be required and we look likely to see better levels to sell it than we are currently trading at.

24 Hour: Neutral – Mildly Bullish? Medium Term: Neutral
FX Charts Position: Flat
Resistance Support
0.7035 20 Oct high 0.6890 7 Nov low
0.7004 24 Oct high 0.6873 6 Nov low
0.6970 (38.2% of 0.7210/0.6817) 0.6850 Minor
0.6960 (23.6% of 0.7434/0.6817) 0.6832/30 30 Oct low /31 Oct low
0.6953 Session high/7 Nov high 0.6817 11 May low/27 Oct low