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

By | March 6, 2018



EURUSD: 1.2327
EurUsd has been relatively steady following the Italian election result and clings close to 1.2300, with some large option expiries acting as a magnate, which could well be the case again today, with little data on the agenda to provide direction and with traders now looking towards Thursday’s ECB Meeting.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  While the daily momentum indicators have been pointing down, they are now looking more neutral, but with the short term momentum indicators looking constructive, we could see another run towards 1.2360 and possibly to 1.2400 although with the ECB due on Thursday there may be diminished interest to buy it up above those levels. The downside currently looks relatively underpinned at 1.2300, but below which will again find bids today at 1.2285 and at 1.2260.

Right now I am neutral but In the longer term I think that the strong US data will see the dollar return to a bid tone, and I still prefer to sell Euro rallies from a strategic perspective. The DXY closed the week higher again – just – and the weekly momentum indicators are beginning to look more positive.

Buy EurUsd @ 1.2265. SL @ 1.2245, TP @ 1.2360

Sell EurUsd @ 1.2390. SL @ 1.2435, TP @ 1.2285

Resistance Support
1.2420 19 Feb high 1.2305 Minor
1.2400 (61.8% of 1.2555/1.2155) 1.2280 200 HMA
1.2380 Minor 1.2268/63 Session low /Daily cloud top
1.2363 Session high /Monthly cloud top 1.2250 Minor
1.2340 Minor 1.2235 (61.8% of 1.2155/1.2364)

Economic data highlights will include:

US Factory Orders, API Weekly Crude Oil Stock Inventory

USDJPY: 106.19
US$Jpy headed higher on Monday, underpinned by hopes that a trade war will not eventuate and by some large 107.00 option expiries due early this week. A early dip to 105.35 was reversed and the dollar has since been one way traffic p to a high, so far, of 106.23.

Risk sentiment will again be the main driver for most of this week although Friday will be the main focus, when we have the BOJ Meeting and the US jobs data/ NFP.

1 hour/4 hour indicators: Mixed. Daily Indicators: Turning lower Weekly Indicators:  Turning lower
Preferred Strategy:  The bearish divergence that we mentioned yesterday worked out nicely, with the dollar running up to 16.23 and with the short term momentum indicators pointing sharply higher, I would not be surprised to see a retest of decent resistance in the 106.5/75 band, above which would allow a revisit of 107.00. A failure on the topside could see a run back below 106.00 to minor levels down to the trend lows at 105.35/25. Below that there really is not a lot to hold the dollar up ahead of major Fibo support at around 103.50. In the meantime the 200 MMA, at 105.70, may prove to be decent support.

Note the bullish key-day reversal in EurJpy, which now seems to have further gains ahead of it.

Buy US$Jpy @ 105.80. SL @ 105.20, TP @ 106.90

Buy EurJpy @ 130.40. SL @ 129.70, TP @ 131.80

Resistance Support
107.00 Minor 106.00 Minor
106.75 (61.8% of 107.67/105.24) 105.70 200 MMA
106.57 Daily Tenkan 105.50 Minor
106.45 (50% of 107.67/105.24) 105.24/35 Friday low /Session low
106.22 Session high 105.00 Minor

GBPUSD: 1.3839
Cable headed sharply higher, from 1.3767 to 1.3835, after the UK services PMI beat expectations and also on some positive Brexit transition talk, reaching a high of 1.3877 around the London fix.
1 hour/4 hour indicators: Turning higher? Daily Indicators:  Turning lower. Weekly Indicators:  Possible topping formation.
Preferred Strategy:     Cable remains very choppy, and I suspect is still best left alone, with too many factors, not least the ongoing Brexit headlines, influencing sharp market moves. The short term momentum indicators do still look mildly positive so a retest of 1.3875 may be on the cards, above which could run towards 1.3890/00 and even to 1.3915/30. On the downside, support will be seen below 1.3800 at 1.3780, ahead of 1.3755/65 and 1.3700/10. Sidelined.
Resistance Support
1.3932 (61.8% of 1.4070/1.3711) 1.3805 100 HMA
1.3915 Minor 1.3780 Minor
1.3890 (50% pivot of 1.4070/1.3711) 1.3766 Session low
1.3877 Session high 1.3711 1 Mar low
1.3850 Minor 1.3690 (50% pivot of 1.3062/1.4345)

USDCHF: 0.9402
US$Chf has regained 0.9400 and is finishing near session highs of 0.9408, possibly hinting at a US$ recovery if the trade-war fears continue to recede.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher Weekly Indicators:   Turning lower
Preferred Strategy:  As before, the dailies look constructive, so I prefer to look to buy dips but with the short term momentum indicators looking neutral it may be best to look for levels sub 0.9400 to do so. If so, on the downside, support will be seen at 0.9375/80 and then at 0.9435 today. On the topside, minor resistance will be seen at 0.9410 and at Friday’s high 0.9423. Above there could see a return to the Thursday high at 0.9490 although unlikely today.
Resistance Support
0.9515 Minor 0.9375 Minor
0.9490 1 Mar high 0.9345 Session low
0.9450 Minor 0.9338 (50% of 0.9187/0.9490)/Friday low
0.9423 Friday high 0.9320 Minor
0.9405 100 HMA /Session high 0.9302 (61.8% of 0.9187/0.9490)

Economic data highlights will include:


AUDUSD: 0.7763
The Aud remains rangebound within the 0.7725/75 area and will remain so, probably until the RBA Statement, unless the Q4 Retail Sales spring a surprise. The RBA though will be today’s top priority. No change to policy is expected and any directional move will come from the bias in the statement
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning lower Weekly Indicators:  Turning lower?
Preferred Strategy:

The short term momentum indicators are looking mildly constructive on Monday, so trading from the long side and buying dips may be the plan. If we do see a squeeze higher, resistance will arrive at 0.7770/75 above which could run to 0.7810. The dailies are pointing lower though so a run back to 0.7735/40 may be on the cards, a break of which would allow a return to 0.7715 and then to 0.7700, below which there is not a lot to hold the Aud up until 0.7650.

Strategically, look to sell at around 0.7815, hoping for a return to 0.7735/15.  Eventually looking for 0.7650(76.4% of 0.7502/0.8135).

Buy AudUsd @ 0.7735. SL @ 0.7710, TP @ 0.7800

Sell AudUsd @ 0.7815. SL @ 0.7855, TP @ 0.7735

Resistance Support
0.7845 Minor 0.7736 Friday low
0.7830 Minor 0.7725 Session low
0.7810 (23.6% of 0.8135/0.7711) /200 HMA 0.7700 Minor
0.7790 Minor 0.7675 Minor
0.7777/70 200 DMA/100 DMA /Session high 0.7650 (76.4% of 0.7502/0.8135)

Economic data highlights will include:

TD Inflation, Current Account (Q4), Retail Sales – Jan, RBA Interest Rate Decision /Statement

NZDUSD: 0.7224
The Kiwi is choppy within a tight range above 0.7200. More of the same seems possible with some AudNzd activity likely following the RBA announcement. Traders should note that the Global Dairy Trade Index will be released at around midday UK time.
1 hour/4 hour indicators: Neutral Daily Indicators:  Turning lower Weekly Indicators:  Turning Neutral
Preferred Strategy:   The 4 hour/daily momentum indicators are mixed, so I prefer to stand aside right now. The topside will find offers today at 0.7245/50 and at 0.7260/65 ahead of Friday’s 0.7279 high, beyond which opens 0.7300+. Bids will arrive at 0.7220 ahead of 0.7200, with the major downside target being the major Fibo level at around 0.7185, (38.2% of 0.6780/0.7438). A close below the 8 Feb low/200 DMA of 0.7176 would eventually suggest lower levels still, but we have to wait and see on that.
Resistance Support
0.7340 (61.8 % of 0.7436/0.7185) 0.7218 Friday low
0.7310 (50% of 0.7436/0.7185) 0.7202 Session low
0.7300 200 HMA 0.7185 1 Mar low
0.7280 (38.2% of 0.7436/0.7185) /Friday high 0.7176 8 Feb low/200 DMA
0.7244 Session high 0.7140 10 Jan low

Economic data highlights will include:                                                                                                                                    

T:  Global Dairy Trade Index