Friday saw a selloff in the Euro, which appears to have further downside early in the coming week both against the US$ and also on the crosses, so I prefer to stay short. Elsewhere in the FX markets, the Aud$ and the Kiwi may have put in a near term base ahead of tomorrow’s RBA meeting/Wednesday’s Q2 GDP and may be rangebound today and they both look mildly underpinned both agains the US$ and on the crosses. The longer term outlook though, for both the Aud and the Nzd remain lower.
Stocks look a little toppish in the short term, but with a US holiday today there is unlikely to be any directional move. The same applies to WTI, which also looks heavy in the short term but, overall, further choppy price action within the 53/58 range seems the most likely outcome.
*Trade of the day: Sept 2, 2019; 8:30 AM(AET)
*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.
All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.
Sell EurUsd @ 1.1035. SL @ 1.1070, TP @ 1.0945
Buy EurUsd @ 1.0950. SL @ 1.0925, TP @ 1.1050
Sell AudUsd @ 0.6765. SL @ 0.6785, TP @ 0.6685
Buy AudUsd @ 0.6690. SL @ 0.6660, TP @ 0.6750
Sell NzdUsd @ 0.6340. SL @ 0.6370, TP @ 0.6280
Sell S+P @ 2940. SL @ 2975, TP @ 2845
Buy Gold @ 1500. SL @ 1485, TP @ 1555
Sell Gold @ 1540. SL @ 1555, TP @ 1485
EurUsd: had a tough session on Friday in falling to a new 2 year low of 1.0962. The charts look increasingly heavy and although my initial long term objective of 1.0965 has now been reached, the Euro looks as though it has yet more downside ahead of it and could head towards strong support at 1.0940. I don’t think this will give way at the first attempt, but if wrong, look for further losses towards 1.0860 (76.4% of 1.0340/1.2555), below which there is a chart gap that would take us to 1.0772. On the topside, resistance will be seen at 1.1025 and 1.1050 (both minor) ahead of 1.1067 (23.6% of 1.1411/1.0962), the 200 HMA at 1.1085 and then again at 1.1100, which seems unlikely to be visited again for a while. Selling rallies remains the preferred strategy.
US$Jpy: ended in the middle of Friday’s 106.10/54 range and seems set to do something similar on Monday, leaving us in neutral. Above 106.50/55 would find further offers at 106.67 (28 Aug high) and again at the recent highs at 106.70/76 (23/15 Aug highs), beyond which would then head to the 13 Aug high of 106.97. Above 107.00 would open the way to 107.26 (2 Aug high) and to 107.45 (61.8% of 109.31/104.44) ahead of 108.00 and even 108.15 (76.4) albeit unlikely in the near term. On the downside, minor support now sits at 106.10/15 but back below 106.00, support would be seen at the session low of 105.82 and the Wednesday low of 105.65. Further bids would arrive at 105.50, at 105.15 and at 105.00 (all minor). Beneath 105.00 there would again be little support ahead of the 26 August, 104.44 low and then the January flash-crash low (104.01). A choppy sideways session seems likely, probably again confined to 106.00/50.
AudUsd: The Aud$ traded sideways/lower for much of Friday following yet more poor Australian data, reaching 0.6705 ahead of a late squeeze higher to end the week at 0.6735. The Mfg PMIs are due today but it may well be that the Aud$ hangs near current levels while waiting on tomorrow’s RBA Meeting, so I don’t expect too much action until then. On the downside, support will again be seen at 0.6700/05, below which would open the way back to 0.6688 – the 26 August low, which comes ahead of 0.6675 (7 Aug low). Further out, below 0.6675, there is minor support at 0.6660, but under there would open the way to 0.6500, with little technical support ahead of that, as can be seen in the monthly chart below. In the more distant future we can probably look for a run to the next major Fibo level, which is not seen until 0.6245 (76.4% of 0.4773 (April 2001)/1.1082 (July 2011)), but dont get too excited at this stage. On the topside, nearby resistance will be seen at 0.6750/55 and then at 0.6760/65 ahead of 0.6775/80 and the outside chance of a run back towards 0.6800. I doubt we see it back at 0.6800 in the short term, but if wrong, further offers would arrive at 0.6820, the minor trend high (8 Aug) and then at the Fibo resistance at 0.6830 (38.2% of 0.7081/0.6675) ahead of 0.6878 (50%), 0.6900 and then at 0.6926 (61.8%). 0.6700/0.6750 may well cover it again today and the dailies do still look mildly constructive as they recover from having previously become oversold, so a rally is still possible but I think that levels sub 0.6700 are still more likely in the medium term. A dovish RBA could bring that about sooner rather than later, so could a miss in the Q2 GDP on Wednesday (exp 0.5%qq/1.4%yy).
NzdUsd: The Kiwi made a new multi year low at 0.0.6283 on Friday, last seen in September 2015, and it still looks heavy heading into the new week, currently sitting at 0.6310. With the longer term charts aligning lower, it seems that the Kiwi is due for further downside pressure, and once below 0.6280/85, the next meaningful support is seen at the September 2015 low at 0.6235, while more distant bids would arrive at the August 2015 low at 0.6125. The short term momentum indicators may be trying to turn a little higher, and if so, resistance will arrive at 0.6335 and then at 0.6350/55 ahead of 0.6365 (200 HMA) and at 0.6400, (23 Aug high). Beyond there, unlikely today, would allow for a run towards 0.6428 (20 Aug high) and to 0.6445(23.6% of 0.6789/0.6340). The hourlies are hinting at some minor bullish divergence so we may see a bit of a bounce but the 4 hour charts don’t suggest it will be anything significant and overall, I still prefer to sell rallies.
DXY: (98.36) The DXY ended the week’s at 98.81 and looks underpinned at the start of the week, with the daily MACDs again crossing higher, albeit without too much momentum behind them. The weeklies are also making an attempt to squeeze higher and while I think we may have further mild upside momentum ahead of us, the overall outlook remains for some choppy price action. Minor resistance now sits right ahead, at Friday’s high of 99.02, and if we see a sustained break of 98.90/99.00 we could see the measured, reverse H/S target at around 99.25 (EurUsd: 1..0940 – ish).On the downside, support will now be seen at 98.50/40 (Friday low; 99.41), at 98.16 (Thursday low), at 98.00 and then at 97.86 (Wednesday low) and then at 97.50 (100 DMA).