13 Oct: Forecast: FX: US$/Majors

By | October 13, 2017


EURUSD: 1.1829
Preferred Strategy:  EurUsd is steady ahead of today’s release of the US inflation figures after having tested the neckline of the head/shoulder by reaching 1.1879. A soft inflation reading today would see the dollar come under pressure and would then take out the stops above the neckline and would see the Euro head towards 1.1900/1.2000. A strong number would underpin the dollar and send the Euro lower, potentially setting up an eventual H/S objective of around 1.1550 or an even bigger head shoulder target of 1.1235. Don’t get excited! This is a very long way off.. Overall, another range trade may be the plan for Friday ahead of the US data (1.1800/1.1.1870), beyond which just go with the flow.
24 Hour: Neutral Medium Term: Mildly Bearish  – Prefer to sell rallies
Resistance Support
1.1930 (61.8% of 1.2092/1.1669) 1.1826 Session low
1.1920 Descending trend resistance 1.1795 11 Oct low
1.1900 Minor 1.1760 200 HMA
1.1879/82 Session high/(50% of 1.2092/1.1669) 1.1725 Minor
1.1870 Neckline resistance 1.1700 Minor

Economic data highlights will include:                                      

German CPI/HICP, US Retail Sales, CPI, Michigan Consumer Sentiment Index, Business Inventories, Baker Hughes Oil Rig Count

USDJPY: 112.28
Preferred Strategy:  The dollar remains rangebound within 112.00/113.00, (112.12/112.51), and similar conditions appear set to continue until the US data release. As before, I think the dollar will eventually head higher, so buying dips is preferred although for the time being another tight range could be in store while waiting on today’s US CPI figure.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
113.43 6 Oct high 112.12/07 Session low/11 Oct low
113.20 Minor 111.98/112.00 10 Oct low/(23.6% of 107.31/113.43)
113.00 Minor 111.80 Minor
112.74 9 Oct high 111.65 Minor
112.51 Session high 111.46 25 Sept low

Economic data highlights will include:                     

Foreign Bond/Stocks Investment

GBPUSD: 1.3261
Preferred Strategy:  Cable has had a wild ride on Thursday, initially heading lower on due to the UK payment impasse before spiking higher on speculation that the EU may offer Britain a two-year transitional Brexit deal. Currently at 1.3260, the charts are mixed. With so many balls in the air, including the chance of a November rate hike from the BOE, I am avoiding Sterling right now but the dailies are still pointing lower, so overall, in line with the stronger dollar scenario, I prefer to look for areas to sell into.
24 Hour: Neutral Medium Term: Prefer to sell rallies
Resistance Support
1.3415 (61.8% of 1.3656/1.3026) 1.3220 Minor
1.3375 Minor 1.3190 100 HMA
1.3340 (50% of 1.3656/1.3026) 1.3150 Minor
1.3325 100 WMA 1.3120 Session low
1.3290/92 Session high/4 Oct high 1.3100 Minor

USDCHF: 0.9754
Preferred Strategy:  US$Chf has had a choppy session while waiting on the US CPI, due later today.  The charts are mixed but in the medium term, as before, I still like the dollar higher, looking for a return towards 0.9800 and eventually for a run towards parity although it will take a decent CPI figure to see us make any headway. A close above the 200-DMA (0.9850) would help extend the uptrend – patience may be required! Wait for the CPI but prefer to be long rather than short.
24 Hour: Neutral Medium Term: Prefer to buy dips
Resistance Support
0.9850 200 WMA 0.9755 Session high
0.9835 200 DMA/(61.8% of 1.0099/0.9420) /6 Oct high 0.9711/10 Session low/4 Oct low
0.9807 9 Oct high 0.9685 Minor
0.9789 10 Oct high 0.9676 2 Oct low (38.2% of 0.9420/0.9836) /
0.9763 Session high 0.9642 25 Sept low

AUDUSD: 0.7820
Preferred Strategy:  The Aud reached a high of 0.7835 on Thursday and is currently near the high and will take its next direction from the China Trade Balance (Exp US$39 bio. Exports +8.8%, Imports + 13.5%) ahead of the US inflation data. Look for a choppy session, but the momentum indicators currently look a little more supportive so buying dips looks to be the way of it. A strong CPI figure from the US, hinting at a Fed rate hike in December, effectively eliminating the Australian yield advantage may see a quick move in the other direction, so caution is warranted.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7905 Minor 0.7800 Minor
0.7885 Minor 0.7790 100 DMA
0.7872 (38.2% of 0.8102/0.7732) 0.7770 11 Oct low
0.7850 Minor 0.7749/47 10 Oct low /9 Oct low
0.7835 Session high 0.7732 6 Oct low

Economic data highlights will include:

F: Financial Stability Report, China Trade Balance

NZDUSD: 0.7125
Preferred Strategy:  The Kiwi performed well on Thursday in rallying and the charts look somewhat supportive for further gains although much will depend on today’s US inflation figures. The 200 DMA will provide good resistance although above there could see a quick run to 0.7200. On the downside, support will be seen at around 0.7100, and below 0.7055 would accelerate any negative momentum.
24 Hour: Neutral Medium Term: Neutral
Resistance Support
0.7215 Minor 0.7117 200 HMA
0.7200 (23.6% of 0.7434/0.7058) 0.7090 100 HMA
0.7180 Minor 0.7077 Session low
0.7155 200 DMA 0.7055 10 Oct low
0.7145 Session high/(23.6% of 0.7434/0.7058) 0.7035 Minor