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

By | March 19, 2018


EURUSD: 1.2288
EurUsd was choppy on Friday (1.2259/1.2335)and ended with the dollar mildly firmer, closing back below 1.2300 for the first time since the start of the month. More of the same choppy trade may be possible as we wait on the FOMC meeting/dot-plot outlook, with other points of focus being the March Sentix, ZEW and EU Markit Manufacturing and Services flash PMIs. Today will be quiet in terms of data, and most likely dominated by politics.
1 hour/4 hour indicators: Mixed. Daily Indicators: Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The short term momentum indicators look mixed and the Euro closed back in the daily cloud, so we might expect some choppy trade on Monday, but the 4 hour clouds do suggest the Euro will remain heavy, possibly retesting Friday’s lows and potentially 1.2220. Below their hints at 1.2150, where the 1 March low ties in with the 12 month rising trend support, and thus should be strong support,  if we see it. The long upper wick on the monthly candle also suggests lower levels ahead.

Selling rallies is therefore currently preferred, and back above 1.2300, resistance should again be seen at 1.2335 and then at 1.2350 and at the 15 March high at 1.2383. Beyond there could then return to 1.2400/10, above which could head back to 1.2440 and even to 1.2500 although not today.

The longer term charts still look rather neutral, from a technical perspective, although I think that the improving US data and expected rate hikes, starting on Wednesday, will keep the dollar relatively underpinned, for an eventual move towards the rising trend support, currently at 1.2140.

Resistance Support
1.2412 14 March high 1.2265 (61.8% of 1.2154/1.2444)
1.2383 15 March high 1.2259 Friday low
1.2360 200 HMA 1.2240 Rising trend support
1.2335 Friday high 1.2220 (76.4% of 1.2154/1.2444)
1.2300 Daily cloud top 1.2200 Minor

Economic data highlights will include:

M: EU Trade Balance – Jan

T:  German PPI- Feb, EU Sentix Investor Confidence Survey – Mar, EU Preliminary Consumer Confidence – Mar, API Weekly Crude Oil Stock Inventory

W:  EU Non Monetary Policy Meeting, FOMC Meeting/Interest Rate Decision, Fed Chair Powell Speech, Existing Home Sales, EIA Crude Oil Stocks Weekly Change

T: EU Council Meeting, EU/US Preliminary Manufacturing PMIs – Mar, German IFO Business Climate/Expectations – Mar, EU Current Account – Jan, EU Economic Bulletin, US Jobless Claims, Kansas Fed Mfg Activity, House Price Index.

F: EU Council Meeting, US Durable Goods Orders, New Home Sales, Baker Hughes Oil Rig Count

USDJPY: 105.97
US$Jpy was choppy again on Friday, with the Yen seeing some demand on safe-haven grounds, which sent the pair down to 105.60 although it did bounce late in the day, back to 106.25 before closing at 106.00. More of the same looks likely while we wait on Wednesday’s FOMC Interest Rate Decision and, just as important, whether the dot-plot changes from 3 hikes to 4 for the rest of the year.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:  A cautious approach is required, and Friday’s range of 105.59/106.37 may cover it. The momentum indicators do look mildly constructive and if we manage to break above 106.30/40, a test of the descending trend resistance at around 106.75 may be on the cards. Above here could stretch to 107.00 and then to 107.30/40.

On the downside, support will be seen at the 200 MMA at 105.70 and then at 105.60. Below here opens 105.25 and 105.00 although this is less favoured today and I prefer to buy dips.

Resistance Support
107.47 (23.6% of 114.73/105.25) 105.70 200 MMA
107.28 13 March high 105.59 Friday low
107.00 Minor 105.45 7 March low
106.73 14 March high / Descending trend resistance 105.25 2 March low
106.37 Friday high 105.00 Minor

GBPUSD: 1.3944
Cable remains rangebound at the start of the week against the US$ (1.3921/88) but it is once again firmer on the crosses, on rising hopes of a UK rate hike at Thursday’s BoE meeting. Note that UK Brexit secretary Davis is to meet the EU’s Barnier later today.
1 hour/4 hour indicators: Neutral – Turning lower? Daily Indicators:  Neutral. Weekly Indicators:  Possible topping formation.
Preferred Strategy:    Cable remains very choppy against the dollar, and I suspect is still best left alone, with too many factors, not least the ongoing Brexit headlines, influencing market moves. The 4 hour/daily indicators remain in neutral, and on the topside resistance is building ahead of 1.4000, which should be strong if we get there but above which would trip plenty of stops and likely to open the way to 1.4030, 1.4070 and eventually 1.4100. On the downside, minor support will be seen at 1.3920 ahead of 1.3890/00 and 1.3875. Sidelined. Note that as per Friday’s note, GbpAud did break a long-term resistance line going back to 2015 (chart below) and could now continue towards 1.8370 (200 Week MA).
Resistance Support
1.4100 (61.8% of 1.4345/1.3711) 1.3920 Minor
1.4070 26 Feb high 1.3900 Minor
1.4030 (50% pivot of 1.4345/1.3711) 1.3889 Friday low
1.3995 13 March high 1.3875 13 March low
1.3980/75 Friday high /Daily cloud top/Descending trend resistance 1.3840 12 March low

USDCHF: 0.9521
US$Chf traded higher on Friday , taking the dollar back up to 0.9547, settling the day at 0.9520 but looking constructive heading into the new week.
1 hour/4 hour indicators: Turning higher Daily Indicators: Neutral – Turning higher? Weekly Indicators:   Neutral
Preferred Strategy:  The short term momentum indicators look constructive today, and the dailies also seem to be picking up steam again on the topside so I still prefer to look to buy dips, possibly nearer 0.9490 today, with a SL placed below 0.9450. The immediate resistance will be seen at 0.9545/50 and then at minor levels as we head towards 0.9600, above which allows a move to the 0.9615 Fibo level.

Buy US$Chf @ 0.9490. SL @ 0.9445, TP @ 0.9610

Resistance Support
0.9610/15 Daily cloud top/(50% of 1.0037/0.9186) 0.9484 Friday low
0.9585 Minor 0.9460 (23.6% of 0.9186/0.9547)
0.9560 Minor 0.9450 Daily cloud base/Daily Tenkan
0.9547 Friday high 0.9421 14 March low
0.9520 Minor 0.9409 (38.2% of 0.9186/0.9547)

Economic data highlights will include:


T:  Trade Balance




AUDUSD: 0.7712
The Aud again fell sharply in EU/US trade on Friday, reaching 0.7710 and closing on its lows. A stronger US$ and firm yields, buoyed on the better than expected Industrial Production and Michigan Consumer Sentiment, dragged the Aud lower and it is looking very heavy at the start of the week. Thursday’s Unemployment will be the major local focus this week.
1 hour/4 hour indicators: Turning lower. Daily Indicators: Turning Neutral Weekly Indicators:  Turning lower?
Preferred Strategy:   Although the hourlies are oversold, the 4 hour momentum indicators look increasingly heavy, while the dailies are now tilting lower too. I prefer the downside still, and if correct, below 0.7700/10 would allow a move towards 0.7645, with only minor support at 0.7690 and 0.7670 lying ahead of that. Under there would allow a move to the 100 DMA (0.7615) and to major rising trend support 0.7570, although that may take a while.

On the topside, resistance will be seen at 0.7725/30 and then at 0.7750/55 and 0.7770.

Prefer to sell rallies

Sell AudUsd @ 0.7735. SL @ 0.7775, TP @ 0.7650

Resistance Support
0.7805 200 DMA 0.7710 Friday low
0.7785 200 MMA/ (38.2% of 0.7916/0.7710) 0.7690 Minor
0.7770 100 DMA 0.7670 Minor
0.7755 (23.6% of 0.7916/0.7710) 0.7645 (50% pivot of 0.7160/0.8135)
0.7735 Minor 0.7610 Minor

Economic data highlights will include:

M: China House Price Index – Feb

T:  Australian House Price Index -Q4, RBA Minutes


T: Unemployment – Feb


NZDUSD: 0.7215
The Kiwi headed lower again Friday, breaking down to a low of 0.7207, under pressure from the strong US$/data,. This comes ahead of Thursday’s RBNZ Meeting, at which no change is expected, but the decision comes about 2 hours after the FOMC announcement, so it is likely to be volatile.
1 hour/4 hour indicators: Turning lower Daily Indicators:  Neutral Weekly Indicators:  Turning Neutral
Preferred Strategy:   The 4 hour momentum indicators are heavy still but the dailies remain flat, so I still prefer to stand aside right now although the preference is to sell rallies.  Today will find offers at 0.7235/45 and at 0.7260 ahead of Friday’s high at 0.7280 and 0.7300 although this looks out of reach today.

On the downside, bids will arrive today at 0.7200/10 and then at 0.7175/85, which should be strong, ahead of 0.7140 and the 100 DMA at 0.7110, but we have to wait and see on that.

Sidelined – Prefer to sell rallies

Resistance Support
0.7333 15 March high 0.7207 Friday low
0.7300 Minor 0.7202 5 Mar low
0.7280 Friday high 0.7185 1 March low/200 DMA
0.7260 Minor 0.7176 8 Feb low
0.7235 Minor 0.7140 10 Jan low

Economic data highlights will include:


T:  WBC Consumer Survey, Global Dairy Trade Index

W:  NZ Visitor Arrivals – Feb, WBC Leading Economic Index – Feb, Credit Card Spending – Feb

T: RBNZ Interest Rate Decision/ Statement