31 May: Forecast: FX: US$/Majors: FXCharts

EURUSD: 1.1188

Having fallen to 1.1108 in Asia, the Euro bottomed out and then turned sharply higher after the Reuters announcement regarding the ECB’s likely hawkish tone at the upcoming, June meeting. The spike high has been 1.1204 but currently sits at 1.1180, close to the session’s opening levels.

A neutral stance is now required given the mixed look of the momentum indicators. The dailies still look as if they may be in the process of topping out although the short term momentum indicators are fairly neutral, and it could end up being a day bound by a range of something like 1.1130/1.1230 while we wait of Friday’s NFP figure. Minor support today will arrive at 1.1160/70 and again at 1.1140, below which we could see a run back towards 1.1100/10 and then towards 1.1080 and 1.1050.

On the topside, above the initial resistance at 1.1200/05 could then head back to Friday’s high at 1.1234, Thursday’s high of 1.1250 and then to the trend high of 1.1268. Beyond there, unlikely today, 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).

While the dailies remain toppish, selling rallies still appears to be the game, with a SL above 1.1270, where a channel top appears to have formed. For the next 24 hours a choppy range trade looks likely. Watch out for the China Mfg/Non-Mfg PMI (May), which may cause some mild volatility.

24 Hour: Neutral Medium Term: Prefer to sell rallies.
                                          Resistance Support
1.1300 9 Nov high 1.1170 Minor
1.1268 22 May high 1.1145 Minor
1.1249 25 May high 1.1104/08 (38.2% of 1.0838/1.1268)/30 May low
1.1234 26 May high 1.1075 18 May low
1.1204 Session high 1.1052 (50% of 1.0838/1.1268)

Economic data highlights will include:

German Retail Sales, Import/Export Index, German/ EU Unemployment, Provisional CPI, US Pending Home Sales, Chicago Purchasing Managers Index, Beige Book, API Weekly Crude Oil Stock Inventory , Fed’s Kaplan Speech

USDJPY: 110.83

The Yen has been in demand throughout the session, with US$Jpy falling from a high of 111.30, to a low of 110.65 and is looking heavy going into the US close.

The momentum indicators all now begin to look a little soft, and further downside probes would not surprise. If so, below 110.60 could then see a fall to last Thursday’s low of 110.23, 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 act as a pivot ahead of the session high of 111.30. 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 111.30, but looking for a move towards 110.00 is favoured.

24 Hour: Prefer to sell rallies Medium Term: Neutral
                                         Resistance Support
112.12 24 May high 110.65 Session low
111.95 25 May high 110.57 200 WMA
111.84 26 May high 110.23 18May low
111.46 29 May high 110.00 Psychological
111.30 Session high 110.60 (76.4% of 108.13/114.36)

Economic data highlights will include:

Housing Starts, Construction Orders

GBPUSD: 1.2839

Cable had a choppy session (1.2793/1.2887) with the focus being on the June 8 election. The narrowing of the polls may be a concern for Cable (and the Conservatives!) as a narrow win for the Tories may weaken the bargaining position with the EU in the Brexit negotiations. In the short term, the usual month-end buying of EurGbp may help to cap Cable today.

While the short term momentum indicators look a little more positive, the daily charts are still pointing lower and below today’s low of 1.2793 could revisit Friday’s base of 1.2775, below which we could see a move towards minor support at 1.2750/55. 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 and then, above 1.2900,  at the minor Fibo levels of the fall from the trend high of 1.3047, beginning at around 1.2910.

As before, I mildly prefer to sell rallies although most of the direction until the June 8 election will be poll driven. Anything showing the Conservatives widening their lead over Labour will see a quick reversal to the topside, so keep stops tight.

As I write, a UK Times poll is suggesting the chance of a hung parliament, which would be a nightmare in terms of Brexit negotiations. Cable has seen a quick fall to 1.2800 and could go a lot lower when London come in if they think there is any truth in the headline.

24 Hour: Neutral Medium Term:  Prefer to sell rallies
                                         Resistance           Support
1.2980 (76.4% of 1.3047/1.2775) 1.2830 Minor
1.2940 (61.8% of 1.3047/1.2775) 1.2793 Session low
1.2910 (50% of 1.3047/1.2775) 1.2775 26 May low
1.2887 Session high 1.2756 21 April low
1.2875 100 HMA 1.2688 (38.2% of 1.2108/1.3047)

Economic data highlights will include:

UK Net Lending to Individuals

USDCHF: 0.9745

US$Chf headed up to a 2 week high of 0.9807 on Tuesday,  but then gave up those gains and is back at close to where to started the day, currently at 0.9750.

The dailies still look as though they may be turning to point slightly higher, and on the topside, 0.9775/85, will again act as minor resistance ahead of the 0.9807 high. Back above here would then run towards 0.9845, although possibly not today.

On the downside, back below 0.9730, good support should be seen at 0.9700/0.9690. Below there would then open the way back to 0.9675 and to 0.9600/40 although this looks unlikely to be seen today.

I am neutral on US$Chf although the dailies do mildly suggest looking for levels to buy dips in anticipation of another run to the topside.

24 Hour: Neutral Medium Term: Turning mildly bullish
                                         Resistance Support
0.9895 (50% of 1.0099/0.9691) 0.9736 Session low
0.9845 (38.2% of 1.0099/0.9691) 0.9695/91 25 May low / 22 May low
0.9825 15 May high 0.9675 Minor
0.9807 Session high 0.9635 Minor
0.9785 Minor 0.9600 Minor

AUDUSD: 0.7464

Having fallen to 0.7415 in early Asian trade, the Aud has been in a slow recovery ever since, underpinned by the broad based US$ weakness after the soft US data, and is ending the day towards the high of 0.7468. The Private Sector Credit will be the focus today, along with the China Mfg/Non-Mfg PMIs for May.

Both the short term momentum indicators and the daily charts look mildly constructive, and above the session high we might expect a squeeze back towards minor resistance at 0.7480 and possibly to 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 0.7455, ahead of 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 the local/China data on Wednesday although the dailies do seem to hint at slightly higher levels and a test of 0.7500 would not surprise. The prospect of a soft (even negative) GDP reading next week may limit any positive momentum, which is probably why AudNzd remains so heavy, currently just holding on above 1.0500.

24 Hour: Neutral Medium Term: Neutral
                                         Resistance                                         Support
0.7538 (50% of 0.7750/0.7328) 0.7455 200 HMA
0.7515/17 25 May high/23 May high 0.7415 Session low
0.7495 Minor 0.7407/01 19 May low /(61.8% of 0.7329/0.7517)
0.7480 Minor 0.7388/84 17 May low/15 May low
0.7467 Session high 0.7373 (76.4% of 0.7329/0.7517)

Economic data highlights will include:

Private Sector Credit, (Apr), ANZ Activity Outlook, China Mfg/Non-Mfg PMI (May)

NZDUSD: 0.7092

The Kiwi remains firm on Wed, having made new 3 month highs at 0.7100 during the session, with little reaction seen on the release of the Financial Stability Report which indicated that the NZ financial system remains sound and that the risks facing the system have reduced in the past six months.

The daily momentum indicators remain positive on Wednesday although good resistance lies immediately ahead at the 200 DMA at 0.7105. A topside break would open the way towards 0.7200, where the major descending trend resistance lies, going back to July 2014 at 0.8835.  Note that if the Kiwi finishes up here today (above the April high of 0.7052) it will be making a key-monthly bullish reversal.

On the downside, minor support lies at 0.7075 and 0.7050/55, ahead of the session 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 next Fibo level and to the 24 May low of 0.6988, below which would see a run to 0.6965 and possibly to 0.6940.

24 Hour: Neutral Medium Term: Neutral – Cautiously bullish.
                                         Resistance Support
0.7188 Descending trend resistance 0.7075 Minor
0.7160 (61.8% pivot of 0.7375/0.817) 0.7055 Minor
0.7130 Minor 0.7035 Session low/ (23.6% of 0.6817/0.7100)
0.7105 200 DMA 0.7006 26 May low
0.7100 Session high 0.6992 (38.2% of 0.6817/0.7100)

Economic data highlights will include:

RBNZ Financial Stability Report, ANZ Activity Outlook.

By | May 31, 2017
Source: FXCharts

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