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

By | February 27, 2018


EURUSD: 1.2311
EurUsd headed up to 1.2355 in Europe before the US$ found a bid tone, sending the Euro back to 1.2778 and then remained choppy near 1.2300 for the balance of the session.
1 hour/4 hour indicators: Neutral Daily Indicators: Turning lower Weekly Indicators:  Turning higher? – Possible topping formation.
Preferred Strategy:  The short term momentum indicators look pretty neutral again and a nimble stance is required ahead of Jerome Powell testimony and the US data today, which will include the Durable Goods Orders.

The dailies do seem heavy though, so as with yesterday,  I prefer to look for levels to sell at around 1.2340/60, hoping for an eventual run back to 1.2260 and possibly to 1.2200/10. SL should be above1.2370

Sell EurUsd @ 1.2350. SL @ 1.2385, TP @ 1.2235

Resistance Support
1.2411 22 Feb high 1.2277 Session low
1.2380 Minor 1.2259 22 Feb low
1.2359 21 Feb high 1.2235 Minor
1.2353 Session high 1.2205 9 Feb low
1.2310 100 HMA/55 HMA 1.2180 Minor

Economic data highlights will include:

German Provisional CPI/HICP, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Goods Trade Balance, Durable Goods – Jan, Case Shiller House Price Index – Dec, House Price Index – Dec, Wholesale Inventories, -Jan, Richmond Fed Mfg Index- Feb, API weekly Crude Oil Stock Inventory

USDJPY: 106.91
US$Jpy fell from above 107.00 back to a low of  106.37 on Monday in Asia, with the US$ undermined by softer Treasury yields, although it has since recovered and sits unchanged on the day.
1 hour/4 hour indicators: Neutral/Turning higher? Daily Indicators: Turning higher? Weekly Indicators:  Turning lower
Preferred Strategy:  US$Jpy  is trading between the 100 HMA/200 HMA , which may act as a magnate for Tuesday, but with the short term momentum indicators and the dailies also looking a little more positive, another test of 107.15/20 would not surprise and buying dips is preferred, but with a SL place below Monday’s low of 106.37. The weekly charts still suggest the dollar could suffer further medium-term downside pressure and much will depend on the direction of US yields and stockmarkets. Today may be fairly quiet until the US session, when it will be busy.

Buy US$Jpy @ 106.65. SL @ 106.15, TP @ 107.80

Resistance Support
108.00 Minor 106.80 200 HMA
107.89 14 Feb high /21 Feb high 106.50 Minor
107.76 22 Feb  high 106.37 Session low
107.50 Minor 106.20 Minor
107.13/10 23 Feb high/Session high  100 HMA 106.00 Minor

GBPUSD: 1.3966
Cable had a volatile day on Monday, heading up to 10-day high of 1.4070 during the Europe on a hawkish lean from the previously dovish BoE’s Ramsden, and the odds for a UK rate hike for May  are now 70%, June 88%. Things then turned sour for Sterling which fell sharply to 1.3927 as the US$ bounced in the US session, before another bounce, to finish the day at 1.3970. There are large 1.4000 option expiries today, so expect that to contain the action and to act as a magnate until Powell speaks.
1 hour/4 hour indicators: Neutral Daily Indicators:  Turning Neutral. Weekly Indicators:  Up –Possible topping formation.
Preferred Strategy:     As we said yesterday, Cable is trading ever- tighter ranges, forming a possible triangle and looks ready to break one way or the other for quite a strong move.  I suspect keeping a neutral stance is wise right now, but possibly looking to trade the break of either 1.4070 or 1.3860 and putting a 50 point stop in place may be the right idea.
Resistance Support
1.4100 Minor 1.3950 Minor
1.4069 Session high 1.3927 Session low
1.4040 Minor 1.3904 23 Feb low
1.4025 Minor 1.3880 Minor
1.4000 Minor 1.3850 Minor

USDCHF: 0.9378
US$Chf has traded a choppy 0.9425/90 range on Monday and looks set to do much the same today, with a mildly preferred upside bias.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:   Turning lower
Preferred Strategy:  The dailies look constructive, so I prefer to look to buy dips, possibly around 0.9300/0.9285, with a SL placed at 0.9230. The immediate target is 0.9410, and above there we may get a chance to see 0.9470/0.9500.
Resistance Support
0.9510 (38.2% of 1.0037 /0.9187) 0.9340 Minor
0.9469 8 Feb low 0.9324 Session low
0.9440 Minor 0.9300 Minor
0.9408 22 Feb  high 0.9275 100 HMA
0.9387/90 (23.6% of 1.0037 /0.9187) /Session high 0.9262 22 Feb low

AUDUSD: 0.7851
The Aud reached 0.7892 in early Europe ahead of the US$ finding its own legs in the US session, sending AudUsd back to 0.7825, before closing Monday at 0.7850, more or less unchanged on the day.
1 hour/4 hour indicators: Mixed. Daily Indicators: Neutral – Turning lower? Weekly Indicators:  Neutral – Turning lower?
Preferred Strategy:   The short term momentum indicators are mixed and a nimble stance is required. On the topside, we could see another test of 0.7860/70, a break of which would allow for a run back to 0.7890/0.7900 beyond which would open 0.7930/35 although this seems doubtful today

The dailies are looking a little heavy, so selling rallies is mildly preferred although I suspect it may be a mostly rangebound today. If we do see another squeeze higher, look to sell at around 0.7880/90, hoping for a return to 0.7790/00 and possibly to 0.7760/70 which should be decent support if/when we get there.

Sell AudUsd @ 0.7880. SL @ 0.7780, TP @ 0.7910

Resistance Support
0.7915 Minor 0.7825 Session low
0.7901 21 Feb high 0.7803 23 Feb low
0.7892 Session high 0.7789 22 Feb  low
0.7880 200 HMA 0.7772 200 DMA/100 DMA
0.7860 Minor 0.7758 9 Feb low

NZDUSD: 0.7313
The Kiwi had a volatile session on Monday, heading up to 0.7345 before reversing in the US session t a low of 0.7276 and then bouncing again, to currently sit at 0.7310
1 hour/4 hour indicators: Neutral Daily Indicators:  Turning lower? Weekly Indicators:  Turning Neutral
Preferred Strategy:   The charts look mixed today and a cautious stance is required ahead of the upcoming NZ Trade Balance (exp -$2.71 bio). The dailies still look a little heavy so I prefer to sell rallies with a SL placed  above 0.7365, with the target being the major Fibo level at around 0.7185, (38.2% of 0.6780/0.7438). A close below the 8 Feb low of 0.7176 would eventually suggest lower levels still, but we have to wait and see on that.
Resistance Support
0.7385 21 Feb high 0.7300 Pivot
0.7375 Minor 0.7276/75/70 Session low/(61.8% of 0.7176/0.7436)/23 Feb low
0.7364 22 Feb  high 0.7250 Rising trend support
0.7344 23 Feb high/Session high 0.7240 14 Feb low
0.7325 Minor 0.7220 Minor

Economic data highlights will include:

T:  Trade Balance – Jan