10 Aug: Forecast: FX: US$/Majors

By | August 10, 2017


EURUSD: 1.1759
24 Hour: Neutral – Possibly sell short term strength Medium Term: Mildly Bearish
EurUsd has had a choppy session, with the crosses driving much of the price action, particularly EurChf and EurJpy, which both headed sharply lower. EurUsd did see a brief spike below 1.1700, reaching 1.1688 although it quickly turned higher again and is finishing the day towards the session high of 1.1763.

It could be a similar session ahead given the absence of any major data to drive direction, with traders awaiting developments in the spat between the US/N Korea.

On the downside, back below 1.1700 and the session low of 1.2688 would allow a move towards the 28 July low of 1.1670. Under there would see a test of the rising trend support, currently at 1.1620 and possibly on towards 1.1600, although not yet, and the short term momentum indicators actually look slightly more supportive today.

The topside also looks a little limited on Thursday, and 1.1760/70 will still offer decent resistance but above which could see a run back to 1.1800 ahead of the 8 Aug high of 1.1823. If we do head higher, which seems unlikely given the negative look of the daily charts, further points of resistance would be seen at minor Fibo levels, ahead of the 4 Aug high of 1.1882 and the trend high at 1.1909. Back above 1.0910, there is very little resistance to stand in the way of a move towards 1.2000, with the next Fibo level is not actually seen until 1.2165 (50% of 1.3993/1.0340) although this seems the less likely direction in the next day or two.

Preferred Strategy: Mildly Bearish. Selling short term strength, but looking for a run, eventually, towards 1.1620/1.1650 seems to be the plan. SL above 1.1815 today. It could end up being a rangebound session in the absence of any major data, with Donald Trump’s Twitter account likely to provide any guidance.

Resistance Support
1.1857 (76.4% of 1.1909/1. 1688) 1.1715 Minor
1.1825 (61.8% of 1.1909/1. 1688) 1.1688 8 Aug  low
1.1800 (61.8% of 1.1909/1. 1688) 1.1650 27 July low
1.1772 200 WMA /(38.2% of 1.1909/1. 1688) 1.1620 Rising trend support
1.1763 Session high 1.1600 (38.2% of 1.1118/1.1909)

Economic data highlights will include:

US PPI, Jobless Claims, Monthly Budget Statement, Fed’s Dudley Speech

USDJPY: 109.97
24 Hour: Neutral Medium Term: Neutral
The Yen surged higher on all fronts on Wednesday as risk avoidance set in, with the US$ falling to a low of 109.55 before a bounce to recover 110.00 by the end of the session.

The momentum indicators are now mixed so some caution is warranted, and a session of chopping around either side of 110.00 would not surprise until traders see something to provide a more directional move.

On the topside, minor resistance will arrive in the 110.35/50 area, beyond which, there is scope to head back to 110.70 and possibly to 111.00. A close above 111.05 would ease concerns on the downside and would then allow a move towards resistance at the 200 WMA at 111.25 and then to 111.40 (100 DMA). These seem over the horizon right now but if wrong, look for a move towards 111.65 and eventually to 111.90 (100 WMA) which should be strong resistance, if/when we get there.

On the downside, back below the session low should find decent bids at the rising trend support  at 109.30, a break of which could quickly run to 109.00  and even to 108.80 (Weekly Cloud Base), and if the stock markets see a sharp reversal lower, we could see the US$Jpy move down in tandem as risk aversion builds.

Preferred Strategy: Neutral.

Resistance Support
111.05 4 Aug high 109.80 Minor
110.70 (23.6% of 114.50/109.35) 109.55 Session low
110.50 200 HMA 109.30 Rising trend support
110.35 Session high 109.00 Minor
110.15 Minor 108.80 14 June low

Economic data highlights will include:

Foreign Bond/Stocks Investment, Tertiary Industry Index

GBPUSD: 1.3005
24 Hour: Mildly Bullish Medium Term: Prefer to sell rallies
Cable has moved back to sit at the 1.3000 pivot, underpinned on Wednesday by some M+A activity.

The medium term outlook remains unchanged, given that  the daily momentum indicators still look heavy, and below the session  low would head towards 1.2950 and then to 1.2925, below which could easily head back towards 1.2850, and possibly to the 100 DMA at 1.2825 although this looks unlikely today.

The short term momentum indicators actually look a little more constructive, and on the topside, back above the session high of 1.3027 could revisit the 8 Aug  high at 1.3052  and then on to 1.3070, above which look for a run back towards 1.3100

Preferred Strategy: Still prefer to sell rallies for the medium term downtrend although the intraday charts hint that we may see a short term squeeze to the topside. The UK Industrial Production figures are due today.

Resistance Support
1.3110 (50% of 1.3266/1.2952) 1.2967 Session low
1.3072 (38.2% of 1.3266/1.2952) 1.2951 8 Aug  low
1.3052 8 Aug  high 1.2927 (50% of 1.2588/1.3267)
1.3025/27 (23.6% of 1.3266/1.2952)  /Session high 1.2900 Minor
1.3000 Pivot 1.2847 (61.8% of 1.2588/1.3267)

Economic data highlights will include:

Manufacturing/Industrial Production, Trade Balance

USDCHF: 0.9634
24 Hour: Neutral Medium Term: Neutral
US$Chf fell sharply on Wednesday, along with all the Chf crosses, as demand for the Swiss Franc soared on the back of safe haven demand following Donald Trump’s comments. Having earlier reached a high of 0.9772 following the previous session’s strong US jobs data, the dollar then turned sharply lower to trade down 0.9611, before closing the day at 0.9635.

On the downside, the dollar has so far pulled up just ahead of the 100 MMA (0.9600), which should be decent support but below which would allow a move towards 0.9565, 0.9545 and eventually to 0.9515.

On the topside, resistance will be seen at 0.9670 ahead of 0.9700 although it seems unlikely that we head back above here for a while. If wrong, look for an eventual squeeze back towards the 0.9772 session high.

Preferred Strategy:  Neutral

Resistance Support
0.9772 8 Aug  high 0.9611 Session low
0.9725 Minor 0.9600 100 MMA
0.9695 200 HMA 0.9585 Minor
0.9670 Minor 0.9565 (61.8% of 0.9440/0.9772)
0.9655 Minor 0.9545 Minor

AUDUSD: 0.7886
24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish.
The Aud finally broke below the H/S neckline in falling to 0.7855, from where it has rallied back to a peak of 0.7900, retesting the neckline but so far unable to break above it.

The dailies are still pointing lower, and if we get below 0.7875 we should re-test the 0.7855 low, a break of which would then open the way to 0.7835, 0.7800 and eventually 0.7780.

On the topside, 0.7900 will again see sellers ahead of 0.7915, a break of which could then see a quick run back towards 0.7940/45.  This seems less likely, but if it happens it would negate the head/shoulders theory and could see a larger short-squeeze back towards 0.7980.

Preferred Strategy: The dailies are looking increasingly negative; so once again, trading from the short side, selling rallies, with a SL above 0.7955 could be a plan for Thursday.

Resistance Support
0.7980/85 4 Aug high/200 MMA 0.7870 Minor
0.7965 Minor 0.7854 Session low
0.7942 200 HMA 0.7835 Minor
0.7915 Session high 0.7800 Minor
0.7900 Minor 0.7782 (38.2% of 0.7328/0.8065)

Economic data highlights will include:

Consumer Inflation Expectation

NZDUSD: 0.7351
24 Hour: Mildly Bearish Medium Term: Mildly Bearish
The RBNZ have left rates unchanged, as expected, which has seen the Kiwi jump to new session highs  of 0.7355 after an earlier low of 0.7307, currently sitting at 0.7340. We now await the RBNZ Governor, who will be speaking in the next few hours and is likely to try to jawbone the Kiwi lower.

The 4 hour/daily momentum indicators are mixed, with the dailies pointing lower while the 4 hourlies hint at the chance of a near term recovery.

A cautious stance is therefore required, and on the downside, support will again be seen at 0.7300/10.  Below there could then head to 0.7260/70, albeit probably not today.

On the topside, the initial resistance will be seen at 0.7370 and then at 0.7385 ahead of 0.7400. Above here looks unlikely today but if wrong, the 7 Aug high of 0.7416 would see sellers ahead of 0.7425.

Preferred Strategy: Look to sell rallies, with a SL placed above 0.7385. .

Resistance Support
0.7425 200 WMA 0.7325 Minor
0.7416 7 Aug high 0.7307 Session low
0.7400 Minor 0.7274 (38.2% of 0.6817/0.7557)
0.7370 8 Aug  high 0.7262 18 July low
0.7355 Session high 0.7245 Minor

Economic data highlights will include:

RBNZ Meeting, Monetary Policy Statement, Press Conference, Electronic Card Retail Sales, RBNZ Governor Wheeler Speech