11 Aug: Forecast: FX: US$/Majors

By | August 11, 2017



EURUSD: 1.1770
24 Hour: Neutral Medium Term: Mildly Bearish
The dollar was reasonably well bid ahead of the release of the soft US PPI data, with the Euro falling to 1.1705 in Europe, but that all turned around and the pair are finishing the day at close to session highs with traders now eyeing the chance of another soft CPI outcome later today which would take the Euro back above 1.1800 and possibly to test the trend high above 1.1900.

The short term momentum indicators look slightly constructive, and a soft CPI reading would see a run back to 1.1800 and then to the 8 Aug high of 1.1823. If we do head higher 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 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.

On the downside, the initial support arrives in the broad band between 1.1705/1.1685, below which would allow a move towards the 27 July low of 1.1650. Under there would see a test of 1.1600/10, which should be strong support, although I doubt we get there today.

Preferred Strategy: Neutral. Wait for the CPI. The short term momentum indicators do suggest that we are going to see the dollar remain under pressure, and I would not be putting too much hope on a strong CPI figure to support it.

Resistance Support
1.1857 (76.4% of 1.1909/1. 1688) 1.1703 Session low
1.1825 (61.8% of 1.1909/1. 1688) 1.1688/85 8 Aug  low/ Rising trend support
1.1800 (50% of 1.1909/1. 1688) 1.1650 27 July low
1.1784 Session high 1.1612 26 July low
1.1772 200 WMA /(38.2% of 1.1909/1. 1688) 1.1600 (38.2% of 1.1118/1.1909)

Economic data highlights will include:

German CPI/HICP, US CPI, Baker Hughes Oil Rig Count

USDJPY: 109.13
24 Hour: Neutral Medium Term: Neutral
US$Jpy remains under heavy pressure, not helped today by the move in US stocks, breaking down below the April/June rising trend support and heading to a low of 109.15 and closing near the lows ahead of today’s Japan holiday and the US CPI outcome later in the day.

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.

A soft CPI result could quickly run to 109.00 and to 108.80 (Weekly Cloud Base), which should be decent support at the first attempt. A Friday close below 108.80 would be ominous for the dollar and would suggest a run towards the April low of 108.12, and further out, towards 107.80/50.

On the topside, minor resistance will arrive at 109.50, beyond which there is scope to head back to 109.80, to 110.00 and to the session high of 110.17. Further resistance would arrive at 110.40 and as we said before, a close above 111.05 would be necessary to 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).

Preferred Strategy: Neutral. Go with the flow after the CPI.

Resistance Support
110.81 17 Aug high 109.15 Session low
110.40 (23.6% of 114.50/109.35) 109.00 Minor
110.17 Session high 108.80 14 June low/Weekly cloud base
109.80 Minor 108.50 Minor
109.50 Minor 108.12 17 April low

GBPUSD: 1.2974
24 Hour: Mildly Bullish Medium Term: Prefer to sell rallies
Cable has seen a choppy session either side of 1.3000 although it was not helped today by the soft UK data and remains not too far above the day’s lows, albeit in a relatively tight range (1.2950/1.3014)

The medium term outlook remains unchanged given that  the daily momentum indicators still look heavy, and below the session  low would head towards 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 4 hour momentum indicators actually look very mildly constructive, and on the topside, back above Wednesday’s 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. All up, stay square until the US session.

Resistance Support
1.3110 (50% of 1.3266/1.2952) 1.2951 Session low/8 Aug  low
1.3072 (38.2% of 1.3266/1.2952) 1.2927 (50% of 1.2588/1.3267)
1.3052 8 Aug  high 1.2900 Minor
1.3025/27 (23.6% of 1.3266/1.2952)  /9 Aug high 1.2875 Minor
1.3014 Session high 1.2847 (61.8% of 1.2588/1.3267)

USDCHF: 0.9621
24 Hour: Neutral Medium Term: Neutral
Having earlier squeezed up to a session high of 0.9674 the dollar then turned lower in the US session, falling to a low of 0.9618 and is looking heavy heading into Friday trade.

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 again be seen at 0.9670/75 ahead of 0.9700 although it seems unlikely that we head back above here today unless the CPI is a strong reading. If wrong, look for an eventual squeeze back towards the 0.9772 session high.

Preferred Strategy:  Neutral although the 4 daily momentum indicators do seem to be aligning to point lower.

Resistance Support
0.9772 8 Aug  high 0.9625 Session low
0.9725 Minor 0.9611 9 Aug low
0.9695 200 HMA 0.9600 100 MMA
0.9674 Session high 0.9565 (61.8% of 0.9440/0.9772)
0.9650 Minor 0.9545 Minor

AUDUSD: 0.7872
24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish.
The Aud had a choppy session between 0.7865/0.7910, closing towards the lower end, and now waiting on the RBA Governor Lowe, who will appear before the Australian House of Representatives’ Standing Committee on Economics. He will likely reiterate last week’s SOMP Statement and will probably lament the level of the Aud.

The dailies are still pointing lower, and if we get below 0.7865 we should re-test Wednesday’s 0.7855 low, a break of which would then open the way to 0.7835, 0.7800 and eventually 0.7780.

On the topside, 0.7900/15 will again see sellers, above 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 0.7950 could be a plan for Friday.

Resistance Support
0.7980/85 4 Aug high/200 MMA 0.7865 Session low
0.7965 Minor 0.7854 9 Aug low
0.7942 200 HMA 0.7835 Minor
0.7915 9 Aug high 0.7800 Minor
0.7910 Session high 0.7782 (38.2% of 0.7328/0.8065)

Economic data highlights will include:

China Foreign Direct Investment, RBA Governor Lowe Speech

NZDUSD: 0.7268
24 Hour: Mildly Bearish Medium Term: Mildly Bearish
The Kiwi fell hard after the RBNZ comments yesterday, reaching a low of 0.7251 before a mild bounce; to close the US session at 0.7275, and now awaits the NZ Business PMI and the Food Price Index.

The 4 hour/daily momentum indicators are pointing lower and further downside does seem possible although the short term momentum indicators are now a little oversold.

The daily momentum indicators still look heavy though and a retest of the lows should not be ruled out, below which could then head towards the next significant support at 0.7185 and possibly to 0.7170.

On the topside, the initial resistance will be seen at 0.7300 and then at 0.7325 ahead of 0.7340. Above here looks unlikely today but if wrong, we could revisit the session high of 0.7367. It would take a dire US CPI reading to get there.

Preferred Strategy: Look to sell rallies, with a SL placed above 0.7325.  The NZ Business PMI, Food Price Index

Are coming up.

Resistance Support
0.7367 Session high 0.7251 Session low
0.7355 9 Aug high 0.7220 Minor
0.7340 100 HMA 0.7200 Minor
0.7325 (23.6% of 0.7557/0.7251) 0.7185 (50% pivot of 0.6817/0.7557)
0.7300 Minor 0.7170 12 June low

Economic data highlights will include:

NZ Business PMI, Food Price Index