4 July: Forecast: FX: US$/Majors: FXCharts

  • Economics/ Politics/Central Banks:
  • EU PMI manufacturing finalised at 57.4 in June, revised up from 57.3. UK PMI manufacturing dropped to 54.3 in June, down from 56.3 below expectation of 56.3.
  • US ISM June manufacturing index: 8 vs 55.2 expected.
  • US ISM Manufacturing Employment Index: Jun 57.2 vs 53.3 expectation, 53.5 prev
  • May Construction Spending 0.0% v expectations of +0.3%
  • Currencies:
  • The US$ recovered against all its counterparts after the solid US manufacturing data, in particular making good headway against the Yen, reaching a new 6 week high.
  • The DXY turns higher for first day in five and has the market re-thinking last week’s policy convergence theme after the UK PMI missed expectations while the US data was generally solid.
EURUSD: 1.1365
  • Intraday (1 hour/4 hour) momentum indicators : Turning lower
  • Daily momentum indicators: Up –Possible topping formation.
  • Upcoming market moving events: ECB Praet Speech, US Holiday
24 Hour Outlook: Neutral Medium Term: Mildly Bullish
Preferred 24-hour Strategy:  The Euro was unable to overcome the major descending trend resistance seen at 1.1450, and has headed lower, to finish Monday at 1.1365, ahead of the US holiday. Expect a quiet session ahead.  Back below 1.1350 could see a slide to 1.1300, possibly to 1.1280, but buying dips still seems to be the plan given the positive look of the longer term momentum indicators.On the topside, a break of 1.1445/50 would target the May 2016 high of 1.1616 although this seems rather unlikely today.  Look for 1.13/1.14 to contain it today.
Resistance Support
1.1500 Minor 1.1354 Session low
1.1480 Minor 1.1320 (38.2% of 1.1117/1.1445)
1.1445 Descending trend resistance/29 June high/29 June high 1.1300 Minor
1.1426 Session high 1.1285 (50% of 1.1117/1.1445)
1.1395 100 HMA 1.1242 (61.8% of 1.1117/1.1445)

Economic data highlights will include:

US Independence Day Holiday, ECB Praet Speech, EU PPI, API Weekly Crude Oil Stock Inventory


USDJPY: 113.37
  • Intraday (1 hour/4 hour) momentum indicators : Up – Becoming Overbought
  • Daily momentum indicators are Turning higher
  • Upcoming market moving events Markit Services PMI
24 Hour Outlook: Prefer to buy dips Medium Term: Mildly Bullish
Preferred 24-hour Strategy: US$Jpy was a one way street on Monday underpinned by the combination of higher US rates/stocks and a weakened Abe following the weekend Japanese election results. Further upside progress looks likely and a sustained break of 113.45/50 would open the way to 113.85 and possibly to 114.35. Bids look likely to emerge ahead of 113.00 and buying dips is favoured although it may be a quiet session given the NY holiday.
Resistance Support
114.35 10 May high 113.10 Minor
114.00 Minor 112.90 Minor
113.85 15 May high 112.60 Minor
113.70 Minor 112.35 (23.6% of 108.80/113.45)
113.45 Session high 112.05 Minor

Economic data highlights will include:

Markit Services PMI


GBPUSD: 1.2942
  • Intraday (1 hour/4 hour) momentum indicators: Turning lower
  • Daily momentum indicators: Neutral – Turning higher
  • Upcoming market moving events Construction PMI, Inflation Report Hearing
24 Hour Outlook: Neutral Medium Term: Neutral
Preferred 24-hour Strategy: Cable was unable to hold on above 1.3000, not helped by the soft UK data in trading down to 1.2930. The momentum indicators are mixed but possible short term weakness looks possible, which would find support at 1.2910 (Daily cloud top) but below which could run to 1.2860. On the topside, resistance will be seen at 1.2880, 1.3000 and again at 1.3022, the session high, although this seems unlikely to be seen on Tuesday. The Inflation Report Hearing will be in focus today.
Resistance Support
1.3047 18 May high 1.2931 Session low
1.3022 Session high 1.2925 (23.6% of 1.2588/1.3029)
1.3000 Pivot 1.2910 Daily cloud top
1.2975 Minor 1.2860 (38.2% of 1.2588/1.3029)
1.2950 Minor 1.2810 (50% of 1.2588/1.3029)

Economic data highlights will include:

UK Construction PMI, Inflation Report Hearing


USDCHF: 0.9636
  • Intraday (1 hour/4 hour) momentum indicators: Turning higher
  • Daily momentum indicators: Turning higher?
  • Upcoming market moving events; ECB Praet Speech
24 Hour Outlook: Neutral Medium Term: Neutral
Preferred 24-hour Strategy: US$Chf is a little higher, at 0.9630, with the short term momentum indicators hinting at a run towards 0.9680, possibly 0.9700. On the downside, support will be seen at 0.9600 and again at 0.9550/55. A range trade session of 0.9600/0.9680 seems most likely today.
Resistance Support
0.9750 Descending trend resistance 0.9600 Minor
0.9730 Minor 0.9585 Minor
0.9700 Minor 0.9555/52 Session low/29 June low
0.9680 (23.6% of 1.0099/0.9555) 0.9548 9 Nov low
0.9642/47 Session high/28 June high 0.9521 23 June ’16 low


AUDUSD: 0.7659
  • Intraday (1 hour/4 hour) momentum indicators : Mixed – Turning lower
  • Daily momentum indicators: Up – Possible topping formation.
  • Upcoming market moving events: Retail Sales, RBA Interest Rate Decision
24 Hour Outlook: Prefer to sell rallies Medium Term: Neutral
Preferred 24-hour Strategy: The Aud was heavy through the Monday session, finishing the day at 0.7660, close to session lows, ahead of today’s Retail Sales (exp +0.2% m/m, prior +1%) and RBA Meeting. No change to policy is expected so the statement will drive any directional move.On the topside, resistance will be seen at 0.7680/85 and again at 0.7700/10. A break of 0.7710 suggests a run to 0.7730 and then on to 0.7750 although this now seems unlikely for a while.  The short term momentum indicators are pointing a little lower, to where support should arrive at 0.7645/50 and 0.7630 and then at 0.7600/10.

Until the RBA a neutral stance is required. The daily momentum indicators may be building a topping formation so selling rallies is mildly preferred although I remain cautious.

Resistance Support
0.7749 21 Mar high 0.7643 Session low
0.7725 Descending trend resistance 0.7630 (23.6% of 0.7373/0.7710)
0.7711 29 June high 0.7610 200 HMA
0.7700 Pivot 0.7600 Minor
0.7685 Minor 0.7580 (38.2% of 0.7373/0.7710)

Economic data highlights will include:

Retail Sales, RBA Interest Rate Decision/Statement


NZDUSD: 0.7293
  • Intraday (1 hour/4 hour) momentum indicators: Mixed –Turning lower
  • Daily momentum indicators are Possible topping formation.
  • Upcoming market moving events NZIER Business Confidence
24 Hour Outlook: Prefer to sell rallies Medium Term: Neutral
Preferred 24-hour Strategy: The Kiwi seems to be building a topping formation although the price action is very choppy and difficult to get a handle on. I prefer to sell rallies with a SL placed above 0.7350. The NZIER and then, later, the Global Dairy Trade Index will drive any directional move today.
                                         Resistance             Support
0.7402 8 Nov high 0.7272 Session low
0.7380 Minor 0.7265 200 HMA
0.7360 Minor 0.7253 28 June low
0.7344/45 Session high/29 June high 0.7220 (23.6% of 0.6816/0.7343)
0.7325 Minor 0.7193 22 June low

Economic data highlights will include:

NZIER Business Confidence (Q2), Global Dairy Trade Index

By | July 4, 2017
Source: FXCharts

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