19 Feb: Forecast: FX: US$/Majors + trade ideas

By | February 19, 2018


EURUSD: 1.2410


EurUsd reached as high as 1.2455 in Asia (100 MMA) on Friday but then reversed through the rest of the session, and in closing near 1.2400 it made a bearish key-day reversal. The Euro looks heavy but today’s China/US holidays will diminish interest and it may be fairly quiet.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning Neutral Weekly Indicators:  Turning higher?
Preferred Strategy:  Having made a key day reversal on Friday, the downside now looks to be back in favour and below Friday’s 1.2393 low would allow a run back towards minor Fibo levels at 1.2380 and then at 1.2335 and the greater degree of Fibo support at 1.2320, a break of which would then allow a move towards 1.2275 although not yet. On the topside, resistance will be seen at 1.2445, beyond which could see another squeeze towards 1.2500 albeit not today. Above 1.2500, the 100 MMA will continue to provide strong resistance, if when seen again.

Sell EurUsd @ 1.2445. SL @ 1.2510, TP @ 1.2325.

Resistance Support
1.2569 14 Dec 2014 high 1.2393 Friday low
1.2555 Friday high /100 MMA 1.2380 (50% of 1.2205/1.2554)
1.2500 Minor 1.2350 200 HMA
1.2470 Minor 1.2337 (61.8% of 1.2205/1.2554)
1.2445 200 MMA 1.2320 (23.6% of 1.1553/1.2555)

Economic data highlights will include:

M: EU Current Account, BuBa Monthly Report, US Holiday

T:  EU Preliminary Consumer Confidence, German/EU ZEW Economic Sentiment Survey

W:  EcoFin Meeting, EU/US Flash Manufacturing/Services/Composite PMIs, ECB Non- Monetary Policy meeting,  US Existing Home Sales, FOMC Minutes, API Weekly Crude Oil Stock Inventory

T: German IFO Business Climate/Expectations (Feb), EBC Minutes, US Jobless Claims, Kansas Fed Mfg Activity, EIA Crude Oil Stocks Weekly Change

F: European Council Meeting, German Q4 GDP, EU CPI, US Baker Hughes Oil Rig Count

USDJPY: 106.30
US$Jpy had another tough start to the day on Friday, initially reaching a new 18 month low of 105.55 before a bounce in the US session as the dollar found some stability, to finish the day at 106.30.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:  US$Jpy largely held on above the 200 MMA at 105.70 on Friday and actually looks a little more healthy on Monday. With the short term momentum indicators now pointing higher we could see a run back to 106.80/107.00 in the next couple of sessions, with the first Fibo level not seen until around 107.50.

As we said before though, technically, the daily/weekly charts still suggest that the dollar is headed lower. If 105.50 does get taken out at any time it would open the way to the 10 Nov 2016 low at 104.95, as well as the option barriers at 105.00.

In the meantime, for the next 24 hours, buying dips seems to be the plan.

Buy US$Jpy @ 106.00. SL @ 105.50, TP @ 107.00

Resistance Support
107.89 14 Feb high 106.15 Minor
107.40 Minor 106.00 Minor
107.00 100 HMA 105.65 200 MMA
106.80 Minor 105.55 Session low
106.40 Friday high 105.15 Minor

Economic data highlights will include:

M: Merchandise Trade Balance

T:  Nikkei Mfg PMI, All Industry Activity Index,


T: Foreign Bond/Stocks Investment

F: Japan National CPI

GBPUSD: 1.4026
After making a new trend high of 1.4144, Cable was back down to 1.4000 on Friday, not helped by the resurgent US$ or the UK Retail Sales miss, which ensured that further upside was limited.  In the crosses, Sterling did find some support against the Euro after Merkel/May met in Munich and seemed to agree to disagree over Brexit. Merkel said that she is “curious” about, but “not frustrated” with the British government’s slow progress in outlining its vision of the future relationship with the EU.
1 hour/4 hour indicators: Turning lower Daily Indicators:  Turning Neutral. Weekly Indicators:  Up –Possible topping formation.
Preferred Strategy:    We may have now seen a medium term top in Cable and it looks as though it is going to be choppy, but without too much direction in the days ahead. The short term momentum indicators point to further losses for Cable, and back below 1.4000 would allow for a move towards 1.3950 and possibly 1.3910. On the topside, resistance will be seen at 1.4075 and 1.4100 although I think if we see it here today it may represent a decent sell opportunity, with a SL placed above the Friday high.

Sell GbpUsd @ 1.4085. SL @ 1.4155, TP @ 1.3965

Resistance Support
1.4174 2 Feb high 1.3994/96 15 Feb low /Friday low
1.4150/44 5 Feb high/Friday high 1.3965 100 HMA
1.4100 Minor 1.3955 (50% pivot of 1.3764/1.4144)
1.4175 Minor 1.3930 200 HMA
1.4040 Minor 1.3910 (61.8% of 1.3764/1.4144)

Economic data highlights will include:


T:  CBI Distributive Trade Survey –Orders (Feb)

W:  UK Unemployment (Jan), PSNBR (Jan)

T: UK Preliminary GDP (Q4)


USDCHF: 0.9270
US$Chf recovered from its fall to 0.9187 to finish the week at 0.9275, and looking a little more positive heading into Monday trade.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning Neutral Weekly Indicators:   Turning lower
Preferred Strategy:  The short term momentum indicators are pointing higher on Monday, and above 0.9285/90 opens up 0.9300 and above this would allow a move back  towards 0.9370/75

The longer term charts still look a bit uncertain for the dollar and a failure here could see a reversal, back towards 0.9200 and to the Friday low at 0.9187, last seen in June 2015. Under there sees the June 2015 low of 0.9150, but with the next major Fibo support not seen until 0.9090.

Resistance Support
0.9400 Minor 0.9250 Minor
0.9373 14 Feb high/(23.6% of 0.9977/0.9187) 0.9225 Minor
0.9335 Minor 0.9200 Minor
0.9300 Minor 0.9186 Friday low
0.9287 Friday high 0.9150 14 June 2015 low

Economic data highlights will include:


T:  Trade Balance (Jan), Q4 Industrial Production




AUDUSD: 0.7909
 AudUsd took advantage of the early Friday risk-on mood and reached 0.7988 in early Europe, although having run out of steam there, it then fell sharply to 0.7890, where we now have a minor double bottom with the Thursday low, ahead of a recovery to end the week at 0.7910.
1 hour/4 hour indicators: Turning lower Daily Indicators: Neutral Weekly Indicators:  Neutral
Preferred Strategy:   The short term momentum indicators have now turned lower and hint at another test of 0.7890, a break of which would allow for 0.7860/70 and 0.7825, albeit with no data today, it could be a quiet session.

The dailies are now neutral, giving little hint either way, and I suspect it may be a mostly rangebound ahead, but if we do see a squeeze higher, look for offers to arrive at 0.7945, with a small chance of a return to 0.7985, albeit unlikely.

Sell AudUsd @ 0.7945. SL @ 0.7990, TP @ 0.7825

Resistance Support
0.8014 2 Feb high 0.7891 15 Feb low /Friday low
0.7990/88 (61.8% of 0.8135/0.7758)/Friday high 0.7870 Daily Tenkan
0.7970 Minor 0.7860 200 HMA
0.7945 Daily Kijun 0.7825 Minor
0.7930 Minor 0.7780/72 100 DMA /14 Feb low

Economic data highlights will include:

M:  China NY

T:  China NY, RBA Minutes

W:  China NY, Australian Q4 Wage Price Index, Q4 Construction Work Done

T: New Motor Vehicle Sales


NZDUSD: 0.7389
The Kiwi is back below 0.7400, having reached 0.7436 on Friday, but unable to take out the January high of 0.7438, it then remained heavy through the US session as the US$ bounced from its lows.
1 hour/4 hour indicators: Turning lower Daily Indicators:  Turning higher – Bearish Divergence Weekly Indicators:  Turning higher?
Preferred Strategy:   As with the Aud$, the short term momentum indicators for the Kiwi are looking heavy on Monday, which if correct will see the Kiwi find bids at  0.7365/75  and then at the various minor Fibo levels at 0.7335 and at 0.7305, which should be strong support if we get there.

On the topside, minor resistance will be seen at 0.7400/20 and then at the double top at around 0.7437. Beyond there opens the way to 0.7450 and 0.7475, with the next decent resistance above here not seen until 0.7524, the 1 August 2017 high.

Resistance Support
0.7475 Weekly cloud top 0.7373 (23.6% of 0.7176/0.7436) /Friday low
0.7450 Minor 0.7362 15 Feb low
0.7438/36 24 Jan high/Friday high 0.7350 Minor
0.7420 Minor 0.7337 (38.2% of 0.7176/0.7436)
0.7400 Minor 0.7305 (50% of 0.7176/0.7436) /Daily Kijun/Daily Tenkan

Economic data highlights will include:


T:  Global Dairy Trade Index



F: Q4 Retail Sales