1 June: Forecast: FX: US$/Majors: FXCharts

EURUSD: 1.1241

The Euro was choppy for the first half of the day but eventually squeezed back above 1.1200 and has not looked back since, chopping around below the high of 1.1251, where we now have a minor double top with the 25 May high, but which is not so far away.

A neutral stance is still required given the mixed look of the momentum indicators. The dailies do look as if they may be in the process of topping out but that does not seem to be working out, while the 4 hour indicators are beginning to look more constructive. Given the conflicting nature of the charts, further difficult, choppy trade could lie ahead while we wait of Friday’s NFP figure.

If the 4 hour indicators can build on their positive outlook, then above 1.1250 could quickly revisit the recent trend high of 1.1268, above which, the top of the channel (daily chart) lies at around 1.1285, which might be a decent sell if see today. Beyond there though, there is little to stop it heading back to 1.1300, and above that, the points to watch are at 1.1365 (18 Aug high), 1.1427 (24 June high) and then at 1.1450 (major descending trend resistance).

The dailies look less certain of any upside progress and I would be surprised if we made new trend highs ahead of Friday’s Jobs data although today’s PMIs and ADP data could create some volatility. If we do see a failure at these levels, look for a run back below 1.1200 possibly for a return to 1.1160 and potentially to 1.1100/10 although this seems unlikely today.

While the dailies remain toppish, selling rallies at the top of the channel could be a plan, with a SL above 1.1300.

24 Hour: Prefer to sell rallies at channel top; tight SL Medium Term: Neutral
                                          Resistance Support
1.1326 8 Sept high 1.1225 Minor
1.1300 9 Nov high 1.1200 200 HMA
1.1285 Channel top 1.1163 Session low
1.1268 22 May high 1.1145 Minor
1.1251/49 Session high /25 May high 1.1104/08 (38.2% of 1.0838/1.1268)/30 May low

Economic data highlights will include:

EU Markit Flash Manufacturing/Services/Composite PMIs, US Markit PMIs, ISM Mfg PMI/Prices Paid, Construction Spending, ADP Jobs data, EIA Crude Oil Stocks Weekly Change

USDJPY: 110.77

US$Jpy was led lower today, after an early Asian squeeze up to 111.22, by narrowing yield spreads and some mixed/soft US data, and currently sits at 110.70 after having bounced off the 110.47 low.

Currently sitting close to the 200 WMA, the momentum indicators still look a little soft and further downside probes would not surprise. If so, below 110.45/55 could then see a fall to last Thursday’s low/200 DMA of 110.23/15, below which could potentially head back to the Fibo level at 110.60, albeit unlikely ahead of Friday’s US Unemployment data.

On the topside, 111.00 will once again act as a pivot ahead of the session high of 111.22. Above this currently looks unlikely, but if wrong, minor levels would then lie at 111.45 and 111.85.

Selling rallies, with a SL placed above 111.25, but looking for a move towards 110.00 is favoured.

24 Hour: Prefer to sell rallies Medium Term: Neutral
                                         Resistance Support
111.95 25 May high 110.57/47 200 WMA /Session low
111.84 26 May high 110.23 18May low
111.46 29 May high 110.15 200 DMA
111.22 Session high 110.00 Psychological
111.00 Pivot 109.60 (76.4% of 108.13/114.36)

Economic data highlights will include:

Foreign Bond/Stocks Investment, Nikkei Mfg PMI

GBPUSD: 1.2876

Cable recovered from a European low of 1.2768, climbing quickly to a high of 1.2920, assisted by the weaker dollar but then gave up some of those games as another poll showing a narrowing of the Tory lead over Labour came through. Cable now sits at 1.2888 and the next move is anyone’s guess. Stand aside.

While the 4 hour momentum indicators look a little more positive, the daily charts are still pointing mildly lower, leaving the outlook confused. Back below 1.2800 and today’s low of 1.2768 could revisit minor support at 1.2750/55 but under there, there is little to hold Cable up until 1.2685/90.

The 4 hour indicators are a little more constructive, and on the topside, resistance will be seen at the session high of 1.2920 and then at the minor Fibo levels  (1.2940/80) of the fall from the trend high of 1.3047, ahead of 1.3000 and a possible retest of 1.3015 and eventually 1.3047.

There are better things to look at right now, although a better than expected Conservative win in the election would not surprise, taking Cable higher. A hung parliament would be an ominous outcome.

24 Hour: Neutral Medium Term:  Neutral
                                         Resistance           Support
1.3000 Psychological 1.2840 100 HMA
1.2980 (76.4% of 1.3047/1.2768) 1.2800 Minor
1.2940 (61.8% of 1.3047/1.2768) 1.2768 Session low
1.2920 Session high/200 HMA 1.2756 21 April low
1.2900 Minor 1.2688 (38.2% of 1.2108/1.3047)

USDCHF: 0.9678

US$Chf is leading the way lower, as far as the soft dollar scenario is concerned, making a new trend low today of 0.9669.

Yesterday, the dailies had looked as though they may be turning to point slightly higher although today this looks less certain, and the 4 hour charts appear to be renewing their downside momentum. If correct, then we are running out of much to support the dollar ahead of minor levels only, at 0.9640, 0.9590 and the November spike low at 0.9550, so some caution is warranted.

On the topside, 0.9700 will now act as minor resistance ahead of 0.9735 and the 0.9760 high. Back above 0.9770 would then run towards 0.9800/10, although possibly not today.

24 Hour: Neutral Medium Term: Neutral
                                         Resistance Support
0.9831 (38.2% of 1.0099/0.9669) 0.9669 Session low
0.9807 30 May high 0.9635 Minor
0.9770 (23.6% of 1.0099/0.9669) 0.9600 Minor
0.9760 Session high 0.9575 Minor
0.9735 200 HMA 0.9549 9 Nov low

AUDUSD: 0.7430

AudUsd remains under pressure, weighed down by both the economic outlook and also by softer commodity prices, where iron-ore and oil again led the way lower. After an early squeeze up to the 0.7475 high, the Aud has been under pressure and is finishing the day towards the 0.7424 low.

While I suspect that we are eventually heading lower, the momentum indicators are now pretty much neutral. This could change today if the CAPEX figure (exp +0.3%) and Retail Sales (exp +0.8%) are too far from expectations. A good reading would allow another squeeze back towards 0.7450/60 and then towards the session high of 0.7475. Above this seems unlikely today but beyond 0.7480 could then revisit 0.7500, ahead of the 23 May high of 0.7517. Above here would then look for a run towards 0.7540/45 and eventually to 0.7555 although that remains remote.

On the downside, minor support will be seen at 0.7415 and then again at 0.7400/10, a break of which could then revisit the recent lows at 0.7384/88. Below this would open the way to the 12 May low of 0.7366 and 0.7350 (minor), ahead of the stronger 0.7330 level. Back below the 9 May low of 0.7328 would find little to hold the Aud up until 0.7300 and the rising trend support, at 0.7285, although this seems unlikely to be seen for a while.

A neutral stance is required ahead of today’s data although the prospect of a soft (even negative) GDP reading next week may limit any positive momentum and I prefer to sell into rallies.

24 Hour: Prefer to sell rallies Medium Term: Neutral
                                         Resistance                                         Support
0.7538 (50% of 0.7750/0.7328) 0.7415 30 May low
0.7515/17 25 May high/23 May high 0.7407/01 19 May low /(61.8% of 0.7329/0.7517)
0.7495 Minor 0.7388/84 17 May low/15 May low
0.7475 Session high 0.7373 (76.4% of 0.7329/0.7517)
0.7458 200 HMA 0.7328 9 May low

Economic data highlights will include:

AIG Mfg Index (May), Retail Sales (Apr), CAPEX (Q1), Caixin China Flash Services PMI (May)

NZDUSD: 0.7085

The Kiwi shot up to a high of 0.7120 on Wednesday, underpinned by the positive NZ Activity Outlook released earlier in the day, although it has since given up some of those gains and currently sits back at 0.7085.

The daily momentum indicators remain positive on Thursday although they may be in the early stage of showing a topping formation. If wrong, back above 0.7100, a  topside break of 0.7120 would open the way towards 0.7200, where the major descending trend resistance lies, going back to July 2014 at 0.8835.  Note that the Kiwi finished up May by making a key-monthly bullish reversal, which possibly does hint at further gains through 2017.

On the downside, minor support lies nearby, at 0.7075 and 0.7050/55, ahead of the 30 May low of 0.7035. The next support lies at Friday’s low at 0.7006. A break of 0.7000, unlikely today I suspect, could take us back to the 24 May low of 0.6988, below which would see a run to 0.6965 and possibly to 0.6940.

Terms of Trade coming up.

24 Hour: Neutral Medium Term: Neutral.
                                         Resistance Support
0.7188 Descending trend resistance 0.7080 Session low
0.7160 (61.8% pivot of 0.7375/0.817) 0.7050 (23.6% of 0.6817/0.7120)
0.7120 Session high 0.7035 30 May low
0.7105 200 DMA 0.7006 26 May low /(38.2% of 0.6817/0.7120)
0.7100 Minor 0.6988 24 May low

Economic data highlights will include:

Terms of Trade

By | June 1, 2017
Source: FXCharts

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