Major Currencies Forecasts - page 3
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Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY
EUR/USD: Neutral: Bearish if daily closing below 1.1200.
The anticipated extension lower in EUR was more rapid than expected and the undertone is clearly negative from here. That said, only a daily closing below 1.1200 would indicate that the current neutral outlook has shifted to bearish (for an immediate target of 1.1100). Overall, the downward pressure would continue to increase unless this pair can reclaim 1.1330 within these few days.
GBP/USD: Shift from neutral to bearish: Target 1.4090.
The plunge in GBP took out successive major supports and the outlook has clearly shifted to bearish. While the decline is quickly approaching oversold, further weakness towards 1.4090 appears likely. Stop-loss on shorts should be at 1.4400 even though 1.4330 is already a strong short-term resistance.
AUD/USD: Shift from bullish to neutral: In a 0.7260/0.7460 range.
The bullish phase that started middle of last week was short-lived and AUD dropped below the key 0.7365 support. The outlook for this pair has shifted to neutral and the current movement is likely the start of a consolidation phase that may last for a week or so. Expected range; 0.7260/0.7460.
NZD/USD: Bullish: Further NZD strength only if above 0.7150.
While 0.7030 is still intact, upward momentum continues to deteriorate and the odds for further NZD strength have diminished considerably. From here, further up-move is likely only if there is a clear break above the recent high of 0.7150. A breach of 0.7030 would indicate the start of a neutral consolidation phase.
USD/JPY: Bearish: Target 106.00.
The decline from last Friday’s peak is gaining momentum and our immediate target at 106.00 appears to be within reach. A break below this level would shift the focus towards the 105.50/55 low seen in early May.
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY
EUR/USD: Neutral: Bearish if daily closing below 1.1200.
While the downward momentum has eased somewhat after the rebound from the low of 1.1231 yesterday, the undertone for EUR is still weak and the immediate risk is tilted to the downside. However, as highlighted yesterday, only a daily closing below 1.1200 would indicate the current neutral outlook has shifted to bearish. In the meanwhile, this pair is expected to remain under pressure unless it move and stay above the 1.1330 resistance.
GBP/USD: Bearish: Target 1.4090.
There is no change to the bearish GBP view and we continue to anticipate a move towards the immediate target of 1.4090 (overnight low of 1.4117). Stop-loss on shorts should remain unchanged at 1.4400 for now even though 1.4330 is already a strong shortterm resistance
AUD/USD: Neutral: In a 0.7260/0.7460 range. [No change in view].
The bullish phase that started middle of last week was short-lived and AUD dropped below the key 0.7365 support. The outlook for this pair has shifted to neutral and the current movement is likely the start of a consolidation phase that may last for a week or so. Expected range; 0.7260/0.7460.
NZD/USD: Bullish: Slim prospect for further NZD strength.
The 0.7030 stop-loss for the current bullish NZD view is barely intact (overnight low of 0.7032). There is a slim prospect that this level may continue to hold but unless NZD can move and stay above 0.7105 by end of today, the outlook for this pair would shift to neutral.
USD/JPY: Bearish: Immediate 106.00 target exceeded; focus on 105.50/55 now.
The immediate target of 106.00 that was first highlighted last Monday was exceeded yesterday as USD dropped to low of 105.72. While downward momentum is not as impulsive as preferred, the outlook in the coming days is still clearly bearish and the next level to focus on is at the year-to-date low of 105.50/55 seen in early May. A break below this level would open up the way for further decline towards the major support zone of 105.00/105.20.
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EUR/USD: Euro Notably Declines, Struggling on Union's Future
The single currency was trading with notable losses against the greenback on Tuesday, as mounting worries over Brexit snapped the EUR/USD pair's moderate rebound seen yesterday.
The latest polls surprisingly unveiled the revival of the 'Leave' camp, leading some analysts and bookmakers to anticipate odds favoring Brexit by the end of the week, following a sharp decline from the almost 80% probability of the UK staying within the European Union seen just a week ago.
''Brexit seems to have gained traction over the last few days, according to the latest poll. The actual consequences of a Brexit are difficult to price in and the market is closely monitoring the polls,'' Swissquote Research market strategist Arnaud Masset noticed.
In addition, German Bunds highlighted the current risk-off mood, as yields on the benchmark 10-year notes fell into negative territory for the first time, a strong signal of rising demand for safe asset classes.
Therefore, the EUR/USD dropped 0.87% to $1.1191 during the US market hours, while the US dollar index rose a strong 0.73% to 95.10 points.
read more
PBOC sets yuan reference rate for today at 6.6001 (vs. yesterday at 6.5791)
PBOC injects 65bn yuan via 7-day reverse repos
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY
EUR/USD: Shift from bearish to neutral: In a 1.1195/1.1330 range.
The expectation for EUR to move clearly below the 1.1195/1.1200 support was proven wrong quickly as EUR surged above the 1.1290 stop-loss in overnight trading. The outlook for EUR has shifted back to neutral and only a clear break out of the expected 1.1195/1.1330 range would indicate the start of a sustained directional move.
GBP/USD: Bearish: Target 1.4090.
While shorter-term momentum has eased, it is too early to expect to a low in GBP. Only a break above the 1.4330 stoploss would indicate that the 1.4091 low seen two days ago is the extent of the bearish phase (our immediate target is at 1.4090). In the meanwhile, GBP is expected to trade sideways for a few days before staging another attempt to move clearly below 1.4090.
AUD/USD: Neutral: In a 0.7260/0.7460 range.
As highlighted yesterday, the neutral phase that started earlier this week is still intact. From here, we continue to expect AUD to trade within a broad 0.7260/0.7460 range.
NZD/USD: Neutral: Pull-back has scope to extend lower to 0.6915.
Despite the spike to a high of 0.7095 after the release of better than expected GDP data, the current NZD strength is unlikely to be sustained. As long as the recent 0.7145/50 is intact, we continue to hold a neutral stance for NZD and a deeper pull-back towards 0.6915 cannot be ruled out just yet.
USD/JPY: Bearish: 105.55 exceeded, focus on 104.00 next.
USD just broke clearly below the major 105.50/55 support at the time of writing (BOJ announced no change in policy). There is no change to the bearish view and from here; the focus has shifted to 104.00.
source
Majors at Key Levels Heading into a Packed Week
It’s FOMC/BoJ later, sure. But lets first not overlook the Australian second quarter inflation data released Tuesday during Asia:
With the previous quarter’s inflation miss seen as the catalyst for the last RBA rate cut, traders’ eyes are rightfully focused on this early week release and have it earmarked as the premier confirmation signal for an August cut.
With markets currently pricing in a 65% chance of a cut, thanks to some economist expectations of a headline figure rebound, I actually think that AUD/USD has plenty of room to move either way and is well and truly in play for traders.
AUD/USD Hourly:
Click on chart to see a larger view.
The hourly shows what seems to be a bit of an equilibrium level. Zoom out and you can see that it is basically the midpoint of a range and a visual representation of a market full of traders not willing to position themselves heavily one way or the other.
AUD/USD 15 Minute:
Click on chart to see a larger view.
I’ve thrown in the 15 minute chart as it is a little intra-day confluence of resistance to begin the week on.
No way is this the sort of level you blindly short, but if it breaks and fails, the channel could act as a nice re-test level on the way back down, and help to accelerate momentum to the lows quite quickly. Confirmation like this is key for taking trades off such short term, intra-day levels such a this.
Moving onto the week’s big ticket item, the US FOMC meeting Thursday morning and the quiet Fed has to finally start to pipe up once again!
With 2016 rate hikes having been thrown out the window, attention turns to forward guidance and just how confident the Fed is as we head into the back half of the calendar year.
USD strength has been a common denominator across the forex majors, but it has really been all about external factors driving /USD forex markets.
USDX Daily:
Click on chart to see a larger view.
From a technical point of view, we focused on the USDX early last week. We spoke about said strength, but also highlighted the confluence of resistance that price was butting up against. Price has pushed its head through the level and tested the gap.
As we get further into the week and the Fed speakers start to crawl out of the woodwork, we’ll look to try and identify some pricing and expectation mismatches into the release.
Now finally, lets not forget the evolving Yen story set to explode this week in the lead up to Friday’s BoJ meeting.
Will the BOJ disappoint an expectant market?
USD/JPY has rejected off daily channel resistance late last week on a simple headline rumour, giving a preview to the type of knee jerk reactions we can expect this week.
USD/JPY Daily:
Click on chart to see a larger view.
With the rally USD/JPY has seen over the last month or so, in my opinion they are going to have to pull out all stops not to disappoint.
While you can read plenty of economist opinions’ on desperate, last resort monetary policy that we’re seeing in Japan, all that matters to us as traders is whether they will keep the market happy by matching its expectations. BIG expectations at that.
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD
EUR/USD: Bearish: Immediate target at 1.0905/10.
While there is no change to the bearish outlook for EUR, the current price action is clearly not inspiring for those who are bearish. EUR really has to take out the recent low near 1.0950 soon or the current downward momentum would fizzle out quickly. Immediate target remains at 1.0905/10 and stop-loss is unchanged at 1.1040
GBP/USD: Neutral: In a 1.2960/1.3320 range. [No change in view]
We shifted to a neutral stance about 2 weeks ago and since then GBP has been trading choppily within a broad range. However, downward momentum has improved somewhat but only a clear break below the major 1.2960 support would indicate the start of a sustained down-move. At this stage, the prospect for such a move appears to be quite low.
AUD/USD: Neutral: In a 0.7440/0.7600 range.
While there is no change to the current neutral outlook for AUD, the recent short-term downward pressure has eased and instead of extending further to 0.7400, AUD is more likely to trade sideways for now. Only a clear break out the expected 0.7440/0.7600 range would indicate the start of a sustained directional move.
NZD/USD: Shift from bearish to neutral: In a 0.6950/0.7120 range.
The breach of 0.7080 indicates that the bearish phase that started early last week has ended (revised target at 0.6895 is not met). The outlook from here is viewed as neutral and we expect this pair to trade sideways, likely within a 0.6950/0.7120 range.
USD: Staying The Bullish Course Vs These Currencies
The July FOMC meeting changed little in terms of the USD outlook. The Fed remains open to further tightening this year, possibly as early as September, but they will play it in reaction to the data, which includes two jobs reports ahead of the next policy meeting.
Next week will offer plenty of further evidence on the economy including the July Manufacturing and Services ISM on Monday and Wednesday respectively, and non-farm payrolls on Friday.
If data holds up well as the market currently expects, the odds for Fed tightening should continue to rise from their current level of a 45% chance of one hike by December. The risk environment has turned shakier in recent days and there could be more to come. This should not be a major concern for USD bulls, however, as the USD benefits from both a safe haven status and a positive growth story vis-à-vis its G10 counterparts.
In the near-term we prefer to express this view via commodity-bloc currencies (AUD, CAD and NOK) that are also vulnerable to non-US drivers such as oil prices and domestic monetary easing.
Beware Of A Short Squeeze In GBP/USD And A Spike Higher In EUR/USD
The US economy is still trundling along at a 2%-ish rate, unable to deliver an investment-led acceleration but unlikely to see these weak figures persist as long as there is any slack left in the labour market. So the soggy data, combined with the sense that the global economy is still comfortably away from stalling speed, merely reinforce the pressure on investors to search for yield, wherever and whenever they can find it.
In that context it’s hard to be bullish of the dollar, unfortunately. Yield support is absent, and CFTC positioning data show dollar longs being cautiously rebuilt, and the GDP data will go a long way towards keeping the Fed inactive through the presidential elections. Not a good mix. Beware, in particular, a short squeeze in GBP/USD and a spike higher in EUR/USD.
UK PMI and CBI data were dire, and we’ll get more PMI figures at the start of the week. We’ll get a rate cut and more asset purchases from the BOE as well. Sterling is doomed to fall. And yet...the market is geared up for MPC easing, braced for bad data and short sterling already.
*SocGen maintains a short GBP/USD position from 1.3750 targeting a move to 1.25.