23 May: Forecast: FX: US$/Majors: FX Charts

EURUSD: 1.1238

€/Usd has chopped around either side of 1.1200 on Monday but the pair did rise sharply from the 1.1160 low to a high of 1.1260 after German Chancellor Angela Merkel said the Euro was “too weak” as a result of the ECB’s accommodative monetary policy. The coming session will look to the PMIs and to speeches from various Fed board members, which will continue through the week ahead of the FOMC meeting, for direction.

Given the mixed look of the momentum indicators another choppy session would not surprise, and given the bullish divergence that appears to be building in the 4 hour charts I would be doubtful of heading too much higher today, with 1.1200/1.1300 looking likely to cover it. The dailies though do still point to an eventual move up, and above the initial resistance will at 1.1260 there is little to stop it heading back to 1.1300, beyond which, 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).

On the downside, minor support will be seen at 1.1200/15 ahead of the session low of 1.1160. Below here seems doubtful today, but if wrong, look for a run back towards 1.1100. Buying dips remains the preferred medium term option.

24 Hour: Possible range trade – Prefer to buy dips Medium Term: Mildly Bullish
                                          Resistance Support
1.1350  Minor 1.1215 Minor
1.1326 8 Sept high 1.1200 Minor
1.1300 9 Nov high 1.1160 (23.6% of 1.0838/1.1262)/Session low
1.1280 Minor 1.1145 Minor
1.1262 Session high 1.1100 (38.2% of 1.0838/1.1262)

Economic data highlights will include:

German GDP (Q1), EU Flash Mfg/Services/Composite PMIs, German IFO Business Climate/Expectations , EU Financial Stability Report , US New Home Sales, Flash Mfg/Services/Composite PMIs, Richmond Fed Mfg Index , API Weekly Crude Oil Stock Inventory , Fed’s Kashkari/Harker Speeches

USDJPY: 111.28

US$Jpy had another choppy session on Monday in trading a range of 110.92/111.60, closing pretty much unchanged on the day.

While the dailies still point lower, the 4 hour charts are still attempting a  recovery after having become oversold and further short term gains would not surprise although the weak US$ seen elsewhere may curb any upside momentum. On the topside, above the session high, look for good resistance in the 111.70/80 range but a break of which could then see a move towards 112.00 and 112.30, which might be a decent sell area if we get there.

On the downside, the initial support will be seen at 110.90/111.00 and again at 110.70, ahead of last Thursday’s low of 110.23. A break of this would then find little support until we reach 109.60, albeit not today. Another choppy session in the 111.00/112.00 area would not surprise on Tuesday.

24 Hour: Prefer to buy dips Medium Term: Prefer to sell rallies
                                         Resistance Support
112.30 (50% of 114.36/110.23) 110.92 Session Low
112.00 Minor 110.70 Minor
111.81 (38.2% of 114.36/110.23) 110.50 Minor
111.73 17 May high 110.23 17 May low
111.60 Session high 109.60 (76.4% of 108.12/114.36)/200 DMA

Economic data highlights will include:

Nikkei Flash Mfg PMI, All Industry Activity Index

GBPUSD: 1.3000

Cable lost a bit of ground today after polls indicated that the Conservative Party’s lead has narrowed ahead of UK election, due to be held on June 8. Overall it has been a choppy session and Cable is ending the day sitting right on the 1.3000 pivot.

The momentum indicators are mixed on Tuesday and another choppy, rangebound session would not surprise although the Quarterly Inflation Report and the Public Sector Net Borrowing Requirements could create some volatility and possibly a directional move.

Good resistance lies right ahead at last Thursday’s, 8-month high of 1.3047, but above which could run towards strong offers at 1.3075, and then, further out, towards the long descending term trend resistance at around 1.3120. A break of this looks important and could lead to a quick run towards 1.3270 although that remains to be seen.

On the downside, back below 1.3000 would find good bids at the session low of 1.2965 and then again at 1.2935 ahead of stronger support in the band between 1.2890/1.2910, below which could return to the distant 16 May low of 1.2865.

A neutral stance is required today although I prefer to trade from the long side, looking to buy dips.

24 Hour: Neutral – Prefer to buy dips Medium Term:  Prefer to buy dips
                                         Resistance           Support
1.3120 Descending trend resistance 1.3000 Pivot
1.3100 Minor 1.2965 Session low
1.3075 (23.6% of 1.7191/1.1821) 1.2935 200 HMA
1.3047 18 May high 1.2914 19 May low
1.3042 Session high 1.2888 18 May low

Economic data highlights will include:

Public Sector Net Borrowing Requirements, CBI Distributive Trade Survey, Inflation Report Hearing

USDCHF: 0.9731

US$Chf headed to a new 2017 low of 0.9691 on Monday before a bounce, to finish at 0.9740.

The daily momentum indicators are still pointing sharply lower and further downside momentum seems highly likely in the days ahead although the 4 hour charts appear to be recovering after having become oversold, so further short term consolidation may be needed on Tuesday.

If we do head lower, then back below the long-term rising trend line at 0.9705 would then open the way back to the session low and then to 0.9675 and to 0.9600/40, below which could see a return to the 9 Nov low at 0.9550.

On the topside, the initial, minor resistance will arrive at the session high of 0.9765 and then at 0.9785, above which could see a run back to 0.9800/10, which should be strong if we get there today and may present a decent sell opportunity although I doubt that we see it.

24 Hour: Prefer to sell rallies Medium Term: Mildly Bearish
                                         Resistance Support
0.9845 (38.2% of 1.0100/0.9691) 0.9705 Rising trend support
0.9825 15 May high 0.9691 Session low
0.9804 19 May high 0.9675 Minor
0.9785 (23.6% of 1.0100/0.9691) 0.9640 Minor
0.9765 Session high 0.9600 Minor

Economic data highlights will include:

Trade Balance

AUDUSD: 0.7473

The Aud had a relatively tight range on Monday (0.7435/88), but remains well underpinned against the US$, and looks as though it is going to grind its way slowly towards 0.7500.

Technically, the 1 and 4 hour charts both look slightly positive again on Tuesday, while the dailies also look increasingly constructive, and beyond Monday’s high would open the way to the Fibo level at 0.7502, beyond which would allow a run to 0.7545/55, although probably not today given the absence of any major data to drive it.

On the downside, minor support is seen at the session low of 0.7435, ahead of 0.7400/10 and 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.

For Tuesday, buying dips would once again seem to be the plan, looking for a run back towards 0.7500. There is little local data due this week and external factors are likely to drive the pair.

24 Hour: Prefer to buy dips Medium Term: Neutral
                                         Resistance                                         Support
0.7555 2 May high 0.7455 Minor
0.7545 3 May high 0.7435 Session low
0.7525 Minor 0.7407 19 May low
0.7502 (76.4% of 0.7555/0.7328) 0.7388/84 17 May low/15 May low
0.7488 (38.2% of 0.7750/0.7328) Session high 0.7366 12 May low

NZDUSD: 0.6993

As with the Aud, the Kiwi had a positive session, rising from a low of 0.6913 to a high of 0.6997 and settling nearby, suggesting further gains in the days ahead.

The short term indicators look positive, although the hourlies are now becoming overbought which may hinder any upside momentum today, but on the topside a move beyond 0.7000 would then open the way to the 100 DMA, at 0.7048 and then towards 0.7070 and possibly to 0.7105 (200 DMA).

On the downside, 0.6955 will now provide decent support, but below which could then see 0.6930 and 0.6900/10.   This area may continue to act as a medium term pivot, below which would find further decent support at the 100 WMA at 0.6870 and the previous lows of 0.6862 and 0.6851. Under there, the next support will arrive at 12 May’s low of 0.6826, although that looks fairly safe right now.

For the time being, given the series of higher daily lows since May 11, buying dips does appear to be the near term plan, but keep stops tight under 0.6930.

24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
0.7072 22 Mar high 0.6970 Minor
0.7048/52 100 DMA 24 Apr high 0.6955 (23.6% of 0.6817/0.6997)/55 DMA
0.7030 Minor 0.6928 (38.2% of 0.6817/0.6997)
0.7015 Minor 0.6907 (50% pivot of 0.6817/0.6997)
0.6998 (76.4% of 0.7052/0.6817)Session high 0.6885 (61.8% of 0.6817/0.6997)

By | May 23, 2017
Source: FX Charts

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