9 Aug: Forecast: FX: US$/Majors

By | August 9, 2017


EURUSD: 1.1747
24 Hour: Neutral – Possibly sell short term strength Medium Term: Mildly Bearish
EurUsd headed down to 1.1714 on Tuesday, in thin conditions, after the release of data showing that the US employment market continues to tighten. The JOLTS figure today showed that  U.S. job openings, a measure of labor demand watched by the Fed, increased 461,000 to a seasonally adjusted 6.2 million, the highest level since the series started in December 2000,

The short term charts have now unwound their oversold condition and the charts generally point lower, suggesting that the dollar will remain in demand as we head towards the US inflation figure on Friday. The daily charts also hint that further downside pressure may be placed on the Euro and if so, below the session low would allow a run back towards the 28 July low of 1.1670. Under there would see a test of the rising trend support, currently at 1.1620 and possibly on towards 1.1600, although not yet.

The topside looks a little limited on Wednesday, with the 4 hour chart appearing to be picking up downside momentum. As before, selling rallies towards 1.1800 would seem to be the plan, with a SL placed above the session high of 1.1823. If we do head above higher, points of resistance would be seen at minor Fibo levels, ahead of the 4 Aug high of 1.1882 and the trend high at 1.1909. Back above 1.0910, there is very little resistance to stand in the way of a move towards 1.2000, with the next Fibo level is not actually seen until 1.2165 (50% of 1.3993/1.0340) although this seems the less likely direction in the next day or two.

Preferred Strategy: Mildly Bearish. Selling short term strength, but looking for a run, eventually, towards 1.1620/1.1650 seems to be the plan. SL above 1.1825 today. It could end up being a rangebound session, with just the US Wholesale Inventories to provide any guidance.

Resistance Support
1.1860 (76.4% of 1.1909/1.1714) 1.1714 Session low
1.1835 (61.8% of 1.1909/1.1714) 1.1685 Minor
1.1823 Session high 1.1650 27 July low
1.1785 200 WMA /(38.2% of 1.1909/1.1714) 1.1620 Rising trend support
1.1770 Minor 1.1600 (38.2% of 1.1118/1.1909)

Economic data highlights will include:

US Wholesale Inventories, EIA Crude Oil Stocks Weekly

USDJPY: 110.19
24 Hour: Neutral Medium Term: Neutral
US$Jpy has been unable to rally today, with safe-haven  demand seen for the Jpy after Donald Trump’s comments, and looks increasingly heavy despite the rally seen against the other majors, today trading a range of 110.24/82.

While the short term momentum indicators are now pretty flat, the daily charts also seem to be running out of enthusiasm for any move higher and we really need a daily close above 111.00 in order to gain any real interest for further upside progress. In the meantime, resistance will arrive at 110.50 (#2h) and at 110.80/85. Further out, beyond 111.00 would run into resistance at the 200 WMA at 111.25 and then at 111.40 (100 DMA). These should combine to slow further gains today – if we get there -, but if wrong, look for a move towards 111.65 and eventually to 111.90 (100 WMA) which should be strong resistance, if/when we get there.

On the downside, back below 110.25, the dollar will find bids at 110.00, below which could revisit 109.85 and then 109.65. Further out, we could eventually see a run towards 109.30 and even to 108.80 (Weekly Cloud Base), and if the stock markets ever head lower, we could see the dollar head quite a lot lower as risk aversion sets in.

Preferred Strategy: Neutral.

Resistance Support
111.60 (38.2% of 114.50/109.83) 110.24 Session low
111.25 200 WMA 110.00 Minor
111.05 4 Aug high/Daily Tenkan 109.85/83 3 Aug low /4 Aug low
110.91 7 Aug high 109.65 (76.4% of 108.12/114.50)
110.82 Session high 109.30 Rising trend support

Economic data highlights will include:

Machine Tool Orders

GBPUSD: 1.2991
24 Hour: Mildly Bearish –Prefer to sell rallies Medium Term: Prefer to sell rallies
Sterling remained under heavy pressure on Tuesday and headed back below 1.3000 after the release of the JOLTs figures.

The momentum indicators are still looking heavy, and below the session low would head towards 1.2925, below which could easily head towards 1.2850, and possibly to the 100 DMA at 1.2825.

On the topside, back above 1.3000 could revisit the session high at 1.3052 although this seems unlikely right now. If wrong, look for a run back towards 1.3100

Preferred Strategy: Bearish- Prefer to sell rallies. Watch out today for the Inflation Report Hearing which may place further pressure on the downside.

Resistance Support
1.3110 (50% of 1.3266/1.2952) 1.2951 Session low
1.3072 (38.2% of 1.3266/1.2952) 1.2927 (50% of 1.2588/1.3267)
1.3052 Session high 1.2900 Minor
1.3025 (23.6% of 1.3266/1.2952) 1.2870 Minor
1.3000 Minor 1.2847 (61.8% of 1.2588/1.3267)

Economic data highlights will include:

Inflation Report Hearing

USDCHF: 0.9735
24 Hour: Prefer to buy dips Medium Term: Mildly Bullish
US$Chf today reached levels last seen in late May, peaking at 0.9772 before drifting back to 0.9740 but looking as though it could head higher in the days ahead.

If so, 0.9770/75 will continue to provide decent resistance ahead of 0.9790 and then 0.9805/10. Above there would open up the next Fibo level at 0.9848, above which could then head to the 100 WMA at 0.9870.

On the downside, minor support lies at 0.9700/10 and at 0.9685 ahead of the 4 Aug low at 0.9670. Further out, last week’s lows at 0.9630 comes into view ahead of the 100 MMA (0.9600), which should be decent support if we see it.

Preferred Strategy:  Mildly Bullish. Look to buy dips at 0.9700, looking for a topside break of 0.9765/75. SL sub 0.9670. Possibly another tight session.

Resistance Support
0.9870 Minor 0.9710 7 Aug low/Session low
0.9848 (61.8% pivot of 1.0100/0.9437) 0.9685 (23.6% of 0.9437/0.9763)
0.9807 30 May high/100 DMA 0.9670 4 Aug low
0.9790 100 DMA 0.9640 (38.2% of 0.9437/0.9763)
0.9772 Session high 0.9630 1 Aug low

AUDUSD: 0.7906
24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish.
The Aud dipped to a low of 0.7887 after the release of the  US JOLTS data but then bounced as the US$ eased back when equity prices headed lower, to finish unchanged on the day at 0.7915.

While the short term indicators are mixed and look reasonably neutral, the dailies are warning the longs, and if we get below 0.7885/90 we could then see a move to 0.7875, which should be strong support but below which opens 0.7850, 0.7835 and 0.7820.

On the topside, 0.7945/50 will again see sellers ahead of Friday’s high of 0.7980, and 0.8000. I don’t think we go close to this today, but if wrong, above 0.8000 could then see a return to last Tuesday’s high of 0.8041 and then to the trend high of 0.8065. Above 0.8065, there is little to stop the Aud from heading to 0.8160, albeit probably not today.

Preferred Strategy: The dailies are looking increasingly toppish, so once again, trading from the short side, selling rallies, with a SL above 0.0.7985 could be a plan. Watch out for the possibility of the Head/Shoulder top, which would have a target of around 0.7720.  The China CPI will be in focus today and the RBA’s Kent is speaking shortly.

Resistance Support
0.8000 200 WMA 0.7900 Minor
0.7985 200 MMA 0.7886 Session low
0.7979 4 Aug high 0.7874 21 July low /26 July low
0.7965 200 HMA 0.7850 Minor
0.7942 Session high 0.7835 Minor

Economic data highlights will include:

RBA Asst Gov. Kent Speech, WBC Consumer Confidence, Home Loans, Investment Lending for Homes, China CPI, PPI

NZDUSD: 0.7327
24 Hour: Mildly Bearish Medium Term: Mildly Bearish
The Kiwi remains under steady downside pressure as we approach Thursday’s RBNZ Meeting, when it is likely that the bank will provide a dovish tilt and could attempt to talk the currency down further, although no change to policy is expected.

The 4 hour/daily momentum indicators are both pointing increasingly lower and suggest that further near-term losses lie ahead, and below the session low could head quickly to 0.7300 and then to 0.7270, albeit probably not today.

On the topside, the initial resistance will be seen at 0.7370 and then at 0.7385 ahead of 0.7400. Above here looks unlikely but if wrong, the 7 Aug high of 0.7416 would see sellers ahead of 0.7425.

Preferred Strategy: Look to sell rallies, with a SL placed above 0.7385.

The RBNZ meeting is coming up on Thursday. No change expected but the RBNZ are likely to talk the Kiwi down.

Resistance Support
0.7425 200 WMA 0.7325 Session low
0.7416 7 Aug high 0.7300 Minor
0.7400 Minor 0.7274 (38.2% of 0.6817/0.7557)
0.7385 Minor 0.7262 18 July low
0.7370 Session high 0.7245 Minor