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

EURUSD: 1.1279

EurUsd has been choppy while the market waits on tomorrow’s ECB Meeting. The dollar has seen broad based weakness although the Euro is also somewhat weighed down by selling of the EurJpy cross. The end result is that the pair is pretty much unchanged from this time yesterday and another sideways session would not surprise ahead of the ECB outcome.

The day’s range leaves the outlook unchanged, and for the time being the top of the channel at 1.1285 is capping further upside progress. A break of 1.1285 could take the Euro on to  1.1300, a break of which could elicit a quick move higher, to where 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 short term momentum indicators now look neutral, while the dailies look a little uncertain of any upside progress above the channel top, and back below 1.1230/40 could then see a return to 1.1200. Back under 1.1200, would then allow for another test of 1.1160 and potentially of 1.1100/10, and further out, 1.1075 and 1.1040 are likely targets albeit that they are still some way off.

As before, while the dailies remain toppish, selling rallies at the top of the channel could be a plan, but with a tight SL placed above 1.1300. A daily close above 1.1300 would turn things around and would suggest the Euro is going to look for a test of 1.1400 and possibly 1.1500 at some stage.

24 Hour: Neutral Medium Term: Neutral
                                          Resistance Support
1.1365 18 Aug high 1.1233/40 5 June low /Session low
1.1350 Minor 1.1200/01 2 June Low / 1 June low
1.1326 8 Sept high 1.1163 31 May low
1.1300 9 Nov high 1.1108 30 May low
1.1284 Channel top/2 June high/7 June high 1.1075 18 May low

Economic data highlights will include:

German Factory Orders, EU GDP (Q1), EIA Crude Oil Stocks Weekly Change, Consumer Credit

USDJPY: 109.36

US$Jpy  did as we thought it might, in taking out the minor double bottom at 110.20 and heading sharply lower, reaching 109.22 as a bout of  risk aversion in Asia took hold on the back of increased Middle East tensions. The selling continued through the rest of the session, with the dollar closing near the lows.

The chart gap, going back to mid-April at 109.30 has now been filled, and with the 4 hour/daily charts picking up increasing downside momentum, there is only minor support for the dollar until 108.85, below which we could easily revisit the early April low, just above 108.00.

On the topside, minor resistance lies ahead of 110.00 and then again up to the session high at 110.51.  Further out, 110.70 and 110.90/111.00 will be hurdles although this seems unlikely to be seen again today.

With the dailies seemingly picking up some downside momentum, selling rallies is preferred.

24 Hour: Neutral Medium Term: Neutral
                                         Resistance Support
110.90 200 HMA 109.22 Session low
110.72 5 June high 108.87 21 April low
110.52 Session high 108.32 18 April low
110.25 Minor 108.12 17 Apr low
109.75 Minor 107.80 (61.8% of 98.94/118.66)

Economic data highlights will include:

Leading Economic Index, Coincident Index

GBPUSD: 1.2906

Cable has been choppy, either side of 1.2900 on Tuesday  while waiting on the outcome of the UK election and the ECB meeting, leaving the outlook unchanged. As we said before, both the short-term momentum and the daily indicators are neutral, and ahead of the election Cable is probably best left alone.

The immediate points to watch are unchanged, and on the downside the initial support will arrive at 1.2875 and at 1.2855. Back below 1.2830 would retest 1.2800 and the 31 May low of 1.2768, albeit probably not today. If wrong, under here could revisit minor support at 1.2750/55 but a break of which there is little to hold Cable up until 1.2685/90.

On the topside, Cable reached 1.2950 in early Europe but was unable to carry on due to plenty of selling interest, and instead, it headed back below 1.2900 in choppy trade. A break of 1.2950 though could then lead to 1.2980, ahead of 1.3000, and a possible retest of 1.3015 and eventually 1.3047.

As we said before, there are better things to look at right now although a better than expected Conservative win in next Thursday’s election would not surprise, taking Cable (sharply?) higher. A hung parliament would be an ominous outcome.

24 Hour: Neutral Medium Term:  Neutral
                                         Resistance           Support
1.3047 18 May high 1.2871 Session low
1.3015 25 May high 1.2854 5 June low
1.3000 Psychological 1.2829 1 June low
1.2980 (76.4% of 1.3047/1.2768) 1,2800 Minor
1.2949 Session high 1.2768 31 May low

USDCHF: 0.9618

US$Chf made new trend lows on Tuesday, reaching 0.9613 and suggesting that the dollar’s weakness has further to go.

On the downside, below the session low, there is little to hold the dollar up until 0.9590/0.9600 with the more important level being at the November spike low at 0.9550, roughly where the 200 WMA also lies.

On the topside, back above the 100 MMA – which may continue to act as a bit of a magnate – sellers will be seen at minor levels of 0.9765/75 ahead of 2 June’s high of 0.9719 although I doubt that we see that again today. The short term momentum indicators have turned a little higher today, suggesting a neutral stance and the 100 MMA at 0.9640 may continue to attract while waiting on tomorrow’s ECB outcome.

24 Hour: Neutral Medium Term: Neutral
                                         Resistance Support
0.9727 (23.6% of 1.0099/0.9613) 0.9613 Session low
0.9719 1 June high /2 June high 0.9600 Minor
0.9705 200 HMA 0.9575 Minor
0.9663 5 June high 0.9549/40 9 Nov low/200 WMA
0.9640 100 MMA 0.9517 22 June 2016 low

Economic data highlights will include:


AUDUSD: 0.7511

The RBA left rates on hold, as expected, and the Aud$ has remained firm, taking out 0.7500 in US trade in reaching a high of 0.7520. As we said yesterday, Gold breaking higher would have done the Aud no harm. Further gains for Gold look likely.

We now wait on the Q1 GDP, with no-one expecting a particularly positive outcome. Expectations are for a rise of around 0.1%qq, and anything much above that would see the Aud$ trade sharply higher given the modest expectations. Some analysts are suggesting a negative reading which would quickly take the wind out of the upside momentum, so for the time being a cautious stance in required.

Technically, the short-term momentum indicators still look positive on Wednesday although the hourlies are now showing a degree of bearish divergence and the 4 hourlies are in overbought territory. The dailies are picking up some mildly positive momentum though, and on the topside, if we can make further progress above 0.7520/25 (200 DMA) we could then head on to the 100 DMA (0.7555) and then possibly towards 0.7590/0.7600 although I am doubtful that we get here today.

On the downside, the initial bids will arrive at the minor rising trend support at around 0.7490. A break of this would trigger some short term stops and may produce a trip back towards the session low at 0.7456, below which could revisit 0.7430/45 and even 0.7400/10. Further out, strong support would arrive at 0.7370/75, but a break of which could then see a decline towards the 12 May low of 0.7366 and to 0.7350 (minor). Further out, we should look for a run towards 0.7328 (9 May low) and the stronger 0.7310 level, where the 18-month rising trend support currently lies and could produce a decent bounce if we get there. If not, the Aud would find little to hold it up until minor support at 0.7285 and there is then little to be seen until 0.7160 although this is still a long way off.

Given the overbought nature of the short term charts, selling rallies is preferred, although further out the dailies remain positive.

24 Hour: Prefer to sell rallies Medium Term: Neutral
                                         Resistance                                         Support
0.7588 (61.8% of 0.7750/0.7328) 0.7490 Rising trend support
0.7570 Minor 0.7465 (38.2% of 0.7372/0.7521)
0.7555 100 DMA/2 May high 0.7445 (50% of 0.7372/0.7521)
0.7537 (50% pivot of 0.7750/0.7328) 0.7430 (61.8% of 0.7372/0.7521)
0.7521/25 Session high/200 DMA 0.7405 (76.4% of 0.7372/0.7521)

Economic data highlights will include:

AIG Construction Index, GDP (Q1), China FX Reserves

NZDUSD: 0.7184

The Kiwi marched higher again on Tuesday, briefly taking out the 3 year trend resistance by reaching 0.7204, although the daily close is back, just below it at 0.7180. The Global Dairy Trade Index rose by 0.9% & the WMP +2.9%, which allowed the Kiwi to make the brief break higher.

Further gains would take the Kiwi beyond 0.7200/05 and on towards 0.7240 and to 0.7300, beyond which there is little to stop the Kiwi heading on towards 0.7370. It is too early for that scenario but as we said before, note that the Kiwi finished May by making a key-monthly bullish reversal, which possibly does hint at further gains through 2017.

The 4 hour indicators are hinting at some bearish divergence and on the downside, the initial support lies at 0.7165 and 0.7150, ahead of the 0.7125 session low and 0.7110/15. Below 0.7090 would allow a return to minor 0.7050/60 and, further out, support levels would be seen at the 30 May low of 0.7035 and at 0.7000 a break of which could take us back to the 24 May low of 0.6988.

While looking bid in the short term, I would be tempted to look to sell into strength at around 0.7200, with a tight SL placed above 0.7230. A break and daily close above 0.7200, would change the ball game and could prompt an acceleration to the topside.

24 Hour: Neutral Medium Term: Prefer to sell rallies
                                         Resistance Support
0.7300 Minor 0.7165 Minor
0.7265 Minor 0.7150 Minor
0.7247 23 Feb high 0.7113 5 June low /(23.6% of 0.6817/0.7204)
0.7230 (61.8% of 0.7485/0.6817) 0.7090 200 HMA
0.7204 Session high 0.7056 (38.2% of 0.6817/0.7204)

Economic data highlights will include:

Manufacturing Sales

By | June 7, 2017
Source: FXCharts

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