Further dovish Fed talk sent stocks higher and the US$ lower on Friday, and it looks as though this general theme could continue this week and then as we head towards the FOMC Meeting on July 30/31. The Euro looks pretty much stuck in neutral against the US$ but US$Jpy and US$Chf look heavy in the short term, while the Aud and Nzd seem open to further gains. On the crosses, the Euro is looking rather heavy against each of the Jpy, Gbp and Aud. Stocks are interesting, with the US indices making daily, new all-time highs, while the ASX is looking rather heavy – possibly because the market feels that the Fed will outrun the RBA in the speed of rate cuts. The metals remain volatile, with Gold seemingly building a bullish flag, but with Silver lagging somewhat. WTI remains choppy.
EurUsd: The Euro bounced around within its previously defined range on Friday and this could continue on Monday, but with the 4 hour momentum indicators looking mildly positive, further short term gains seem possible. If so, we need to move away from the 100 DMA, at 1.1255, which is currently acting as a pivot, but further progress could allow for a run towards 1.1285 and to 1.1300 ahead of the 200 DMA at 1.1325 (also 61.8% of 1.1411/1.1192) Above here looks unlikely in the short term, but further gains could then see a run towards 1.1360 (76.4%) 1.1400 and the 25 June high of 1.1411, beyond which the next target is at 1.1447 (20 March high), which ties in with the Fibo level (23.6% of 1.2555/1.1106). On the downside, back below the 100 DMA, support will be seen at 1.1225/30 (minor) and then at 1.1200/1.1190 (1.1192; Daily cloud base). If 1.1190/1.1200 is taken out, which looks unlikely today, then we could see a move towards 1.1178 (76.4%), which ties in with the 18 June low, below which would then open the way to 1.1150 and to strong support at 1.1105/15. I am currently neutral on EurUsd but a move towards 1.1300/25 would not surprise.
DXY: (97.10) The DXY saw further downside pressure on Friday and the 4 hour indicators are pointing lower, while with the daily indicators also appear to be rolling over although the MACDs have yet to cross lower, so for the time being I remain cautious and would maintain a neutral stance. Friday saw a drop below the 100 DMA (97.10) and a return to the 200 DMA (96.71) which provided some support going into the weekend. A break of this would open the way to 96.40 (minor) and 96.00 (200 WMA), below which could see a decline to the 25 June/20 March lows of 95.84/74. This area should be quite strong, but a break would see a move towards the 10 Jan low at 95.03. On the topside, resistance will now be seen at 97.00/10 and then at 97.35/40 ahead of 97.59 (9 July high) and 97.76 (18 June high). Beyond here would then target 98.00 and the trend high at 98.37 (23 May) although that is a long way off. I still prefer to buy dips, but with a tight SL placed at 96.45 (1.1310 EurUsd).
US$Jpy: after having topped out at 108.99 last week, US$Jpy has had a choppy ride either side of 108.00 ever since, and ended the week on its lows, at 107.90. The short term charts point sharply lower but the dailies still looking mildly constructive so a neutral stance is probably wise. We are currently sitting on the Fibo support at 107.88 (50% of 106.78/108.98) but I suspect the short term direction will be lower, and if so, the targets will be at 107.62 (61.8%) ahead of 107.53 (04 July low). Below here would want to look at 107.30 (76.4%) and 107.00 but possibly not yet. On the topside, resistance will be seen at 108.00, 108.25 (200 HMA) and at 108.50 (100 HMA) ahead of 108.60, 108.85 and at 109.00. Beyond here, unlikely today I think, minor resistance is seen at 109.10/15, above which would open 109.50 (50% of 112.40/106.78) and eventually back to 110.00. I remain neutral structurally on US$Jpy but possible prefer to look for levels to buy dips given the mildly positive look of the daily charts. Although they point lower, there is some bullish divergence on the hourly charts, so we could see a bounce from current levels. I would have a SL placed below 107.45.
AudUsd: The Aud continued its rally on Friday, closing at 0.7020, right up against the 100DMA and the 18 month descending trend resistance from 0.8135, a break of which would open the way to 0.7035 (Daily cloud top) and the 4 July high of 0.7047. Beyond this would allow for a move to 0.7060 (61.8% of 0.7207/0.6831) and the weekly cloud base at 0.7077, ahead of the 200 DMA at 0.7095. The daily charts now look neutral though, so a return to the downside may eventuate, where targets would be at 0.7000, 0.6970 (both minor) and 0.6955 (Daily cloud base) ahead of more distant levels at 0.6930/35 and at 0.6910. Below 0.6900 could open the way for a return to the 18 June low of 0.6830 although that remains some way off and bids will be seen at 0.6880 (76.4%) and at 0.6850. Buying dips currently seems to be the plan, but the longer term does not seem positive for the Aud$. I am looking to sell towards 0.7050/70 with a SL placed above 0.7100.
NzdUsd: As with the Aud$, the Kiwi has continued to bounce from last week’s lows to currently sit at 0.6695. The short term momentum indicators are suggesting the chance of further near term gains, where targets would be 0.6710 (200 DMA) and then 0.6725 (1 July high). Beyond that opens the way to 0.6763 (61.8% of 0.6938/0.6481) and 0.6782 (15 April high). On the downside, support will now be seen at 0.6680 (100 DMA) and then at 0.6650/55 and at 0.6630/35 ahead of 0.6590/0.6600. The short term momentum indicators are showing some bearish divergence, so selling rallies at/above 0.6710 remains the medium term plan, with a SL placed at 0.6740.
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*Trade of the day: July 15, 2019; 8:30 AM(AET)
*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.
All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.
Sell EurUsd @1.1300. SL @ 1.1335, TP @ 1.1210
Buy EurUsd @ 1.1230. SL @ 1.1195, TP @ 1.1310
Sell AudUsd @ 0.7045. SL @ 0.7075, TP @ 0.6970
Buy AudUsd @ 0.6980. SL @ 0.6940, TP @ 0.7045
Sell NzdUsd @ 0.6720. SL @ 0.6740, TP @ 0.6660
By July 15, 2019
Source: FXCharts