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

By | March 20, 2018



EURUSD: 1.2339
EurUsd  based at Friday’s low and having traded down to 1.2259, it has since squeezed higher on the back of the move in Sterling, reaching 1.2358 before closing at 1.2335, in line with Friday’s high.

Some choppy trade may now be possible as we wait on tomorrow’s FOMC meeting/dot-plot outlook, with today’s point of focus being the March Sentix.

1 hour/4 hour indicators: Turning higher. Daily Indicators: Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The short term momentum indicators look slightly constructive on Tuesday and the Euro closed back above the daily cloud, forming a bullish outside day in the process, signaling the chance of further minor upside progress. The dailies remain neutral though so I don’t think we should expect too much either way ahead of tomorrow’s FOMC outcome.

On the topside, resistance will be seen at 1.2360 ahead of 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.

Support today should arrive at 1.2300 and then at the 1.2260 lows. Below there would target 1.2240 and possibly 1.2220, although these levels currently look safe.

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.

A range to 1.2300/1.2400 would seem likely today.

Resistance Support
1.2500 Minor 1.2320 Minor
1.2444 8 Mar high 1.2300 Daily cloud top
1.2412 14 March high 1.2257 Session low
1.2383 15 March high 1.2240 Rising trend support
1.2358 Session high 1.2220 (76.4% of 1.2154/1.2444)

Economic data highlights will include:

German PPI- Feb, EU Sentix Investor Confidence Survey – Mar, EU Preliminary Consumer Confidence – Mar, API Weekly Crude Oil Stock Inventory, G20 Meeting

USDJPY: 106.12
US$Jpy was choppy again on Monday, bouncing around between 10567 and 106.30, and 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: Turning higher. Daily Indicators: Turning higher Weekly Indicators:  Turning lower
Preferred Strategy:  A cautious approach is required again today, and a similar range may cover it. The 4 hour momentum indicators do look mildly constructive and if we manage to break above 106.40, 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, back below 106.00, 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 105.67/59 Session low/16 Mar low
107.00 Minor 105.45 7 March low
106.73 14 March high / Descending trend resistance 105.25 2 March low
106.30 Session high 105.00 Minor

GBPUSD: 1.4029
Cable rose sharply, to a high of 1.4087 on Monday, before closing the session at 1.4030, after the UK and EU were said to have agreed on a large part of a post-Brexit transition deal, which raised optimism over a smoother exit for the UK from EU. FOMC tomorrow/BOE Meeting, Thursday. CPI today (exp 2.5%yy, Core 2.8%yy) .
1 hour/4 hour indicators: Turning higher – Possible topping formation. 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.

From a technical perspective, the charts do hint at the chance of another move to the topside and if correct, look for a run back to 1.4090/4100 above which would allow for 1.4145 and possibly on to 1.4190/00, with major descending trend resistance coming in at 1.4235.

On the downside, support will be seen at 1.4000 and again at 1.3965 and 1.3945.

Note that as per 16 Mar’s note, GbpAud did break a long-term resistance line going back to 2015 (chart below) and could now continue towards 1.8500.

Resistance Support
1.4193 (76.4% of 1.4345/1.3711) 1.4015 Minor
1.4144 16 Feb high 1.4000 (23.6% of 1.3711/1.4087)
1.4100 (61.8% of 1.4345/1.3711) 1.3965 100 HMA
1.4087 Session high 1.3945 (38.2% of 1.3711/1.4087)
1.4060 Minor 1.3915 200 HMA

Economic data highlights will include:


USDCHF: 0.9505
US$Chf traded up to 0.9551 before turning lower, as the Euro headed higher, falling to 0.9495 and then closing near the previous close of 0.9515..
1 hour/4 hour indicators: Mixed. Daily Indicators: Neutral – Turning higher? Weekly Indicators:   Neutral
Preferred Strategy:  The short term momentum indicators look a little heavy today, although the dailies still seem to be picking up steam and it may turn out to be a choppy, sideways session today while waiting on tomorrow’s FMC outcome.

On the topside the immediate resistance will again be seen at 0.9550 and then at minor levels as we head towards 0.9600, above which allows a move to the 0.9615 Fibo level.

On the downside, support will be seen at 0.9485/95 and then at 0.9465 and 0.9420.

Look for a range trade today.something like 0.9470/0.9550

Resistance Support
0.9610/15 Daily cloud top/(50% of 1.0037/0.9186) 0.9494 Session low
0.9585 Minor 0.9484 16 Mar low
0.9560 Minor 0.9465 (23.6% of 0.9186/0.9551)
0.9551 Session high 0.9421 14 March low
0.9520 Minor 0.9410 (38.2% of 0.9186/0.9551)

Economic data highlights will include:


AUDUSD: 0.7717
The Aud remains heavy but off its lows of 0.7686, confined to a narrow range, with the pair unable to make headway in either direction despite copper and iron-ore heading lower. Today’s focus will be on the Q4 domestic House Price Index (exp 0.0%, prior -0.2%) and the RBA minutes. Thursday’s Unemployment will be the major local focus this week.
1 hour/4 hour indicators: Turning higher? Daily Indicators: Turning lower Weekly Indicators:  Turning lower?
Preferred Strategy:   The short term momentum indicators are oversold and appear to be trying to turn higher today although the dailies are tilting lower, and selling rallies would appear to be the theme.

Overall, I prefer the downside still, and if correct, below 0.7685/90 would allow a move towards 0.7645, with only minor support at 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 and then at 0.7740 and 0.7770.

Prefer to sell rallies

Sell AudUsd @ 0.7760. SL @ 0.7785, TP @ 0.7650

Resistance Support
0.7805 200 DMA /(50% of 0.7916/0.7686) 0.7700 Minor
0.7785 200 MMA 0.7686 Session low
0.7770 100 DMA /(38.2% of 0.7916/0.7686) 0.7670 Minor
0.7740 (23.6% of 0.7916/0.7686) 0.7645 (50% pivot of 0.7160/0.8135)
0.7725 Session high 0.7610 Minor

Economic data highlights will include:

Australian House Price Index -Q4, RBA Minutes

NZDUSD: 0.7245
The Kiwi has squeezed up from the session low of 0.7195, making some good progress in reaching 0.7260 before closing at 0.7240. The Consumer Sentiment survey is coming up and the Global Dairy Trade Index is due in European time. 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 higher Daily Indicators:  Neutral Weekly Indicators:  Turning Neutral
Preferred Strategy:   The 4 hour momentum indicators have turned higher 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 0.7260 ahead of 16 Mar’s high at 0.7280 and the Fibo levels at around 0.7295 above which could head to 0.7315 although this looks out of reach today.

On the downside, bids will arrive today at 0.7200 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 0.7220 Minor
0.7317 (76.4% of 0.7354/0.7195) 0.7195 Session low
0.7293 (61.8% of 0.7354/0.7195) 0.7185 1 March low/200 DMA
0.7280 16 Mar high 0.7176 8 Feb low
0.7260 Session high 0.7140 10 Jan low

Economic data highlights will include:

WBC Consumer Survey, Global Dairy Trade Index