28 Jul-02 Aug: A big week of data ahead. US$ looking increasingly lively!

EUR/USD: 1.3428
Due to travel commitments, the daily outlook this week will be limited.

The coming week is going to be a big one for data. It will be busy on most days but the focus will be on Wednesday’s FOMC meeting and US GDP, Thursday’s EU CPI & Unemployment details and then on Friday, the global PMI’s and the US Jobs/NFP numbers. Plenty of opportunity there!

The Euro fell to levels last seen in November 2013 and the dailies suggest that there is still plenty of room left in the move. Having fallen to meet the support at 1.3420 (200 WMA), this may hold it up for a while, but below there, and then below 1.3400 would head to 1.3370 (50% pivot % of 1.2754/1.3995) and eventually to 1.3340 (100 WMA) and 1.3294 (7 Nov ’13 low).

The 4 hour charts are also pointing lower but are oversold and so we still need to allow for a short squeeze back towards 1.3500 where the 200 HMA lies. Ahead of that, minor resistance at the 100 HMA sits at 1.3475. A break above 1.3500 would trigger plenty of stops, potentially taking the Euro up towards last week’s top at 1.4548. I don’t really see it beyond here, but if wrong, above 1.3550, would head to meet sellers at 1.3570 and 1.3585, ahead of 1.3600. Given the ongoing negative look of the daily indicators, I don’t really see it back above 1.3600 for quite a while now, but if wrong, and the Euro does head higher over the next couple of days, offers in the 1.3640/50 area remain solid, where the minor Fibo resistance at 1.3646 (61.8% of 1.3700/1.3562) would provide strong resistance.

In the bigger picture, with the wedge formation now having been broken on a weekly close basis, we could be at the start of a larger move down, potentially targeting the 9 July low 2013 at 1.2754. Don’t get too excited yet, if it turns out to be correct, I think it will be a choppy and relatively orderly progression and there should be plenty of opportunity to get on board into the odd, intermittent short squeeze.

Sell rallies seems to be the plan.

Economic data highlights will include:

M: US Composite/Services PMI (provisional), Pending Home sales, Dallas Fed Mfg Index

T: US Consumer Confidence

W: EU Consumer Confidence, Business Climate, Economic Sentiment, German CPI, US GDP, Personal Consumption, FOMC Meeting/IR Decision/Statement, ADP employment data

T: German Retail sales, Unemployment, EU CPI (provisional), Unemployment, US Jobless Claims, Chicago Purchasing managers Index

F: EU Mfg PMI’s, US Personal Consumption/Income/Spending, Unemployment, NFP, ISM Mfg PMI, Construction Spending, Rts/Michigan Consumer Sentiment Index.

Meta Trader – AxiTraderEUR/USD: Daily


USD/JPY: 101.82
The dollar made a spike up to 101.93 in London on Friday but that was as good as it got, and unable to overcome the daily cloud base (101.93) and the heavy resistance at 102.00, where the 100/200 DMA’s are converging, the dollar fell back slightly to finish slightly lower.

Short term momentum does look mildly positive though and if 102.00 can be successfully taken out, we should expect a run up towards the descending trend resistance at around 102.50, with minor interim resistance at around 102.30.

The downside will now see some decent support in the 101.60/70 area and below there will be layered buyers all the way down to the recent low at 101.08, which comes just ahead of the important 101.00 area, where the semi-official bids were rumoured to be sitting last week.

Looking to buy dips, without searching for too much volatility seems to be the plan, but I think there are better things to trade.

Economic data highlights will include:

M:

T: Industrial Production (provisional)

W:

T: Housing Starts

F: Nomura Mfg PMI

Meta Trader – AxiTraderUSD/JPY: Daily


GBP/USD: 1.6975
Cable is in the process of breaking down through the major rising trend support, which could see a deeper move lower to the 18 June low at 1.6918 and potentially down to the 100 DMA at 1.6837.

The dailies are hinting at such a possibility although the 4 hourly charts are oversold and we need to leave room for a bounce towards 1.7040/50. If seen, this will probably present a sell opportunity, although back above 1.7050 would concern as we could then be in for another run back to 1.7100. At this stage, it looks doubtful.

Selling rallies towards 1.7000/50, looking for a deeper decline towards 1.6900 looks to be the strategy.

Economic data highlights will include:

M:

T:

W:

T:

F: UK Mfg PMI

Meta Trader – AxiTraderGBP/USD: Daily


USD/CHF: 0.9048
US$/Chf has returned to the resistance at the top of the descending channel, reaching 0.9051 on Friday. This is also the weekly cloud base and will act as strong resistance, but if/when broken would suggest an acceleration up towards 0.9100 and then 0.9130 (23.2% of 0.9838/0.8698) and then onto where the 100/200 WMA both currently lie at around 0.9165. There will be plenty of headwinds before we see it up here though and for the next day or two, the channel top may prevent further gains.

On the downside, the previous sticky resistance in the 0.8990/0.9010 area should now provide decent support, although a break would take us back to around 0.8945 where the minor rising trend support and the 100 DMA both lie. I don’t think we are heading back here again for a while, but if wrong, a break of this support would see a return to 0.8900 and then to the 200 DMA at 0.8880 area.

As elsewhere, buying the dollar looks increasingly attractive, but allow for dips.

Economic data highlights will include:

M:

T:

W:

T:

F: Holiday

Meta Trader – AxiTraderUSD/CHF: Daily


AUD/USD: 0.9395
The Aud was unable to maintain its gains of last Thursday when it spiked up to 0.9472 and it finished the week back below 0.9400, sitting on the 200 HMA at 0.9392.

The 4 hour charts suggest further near term weakness ahead and if we take out the rising trend support, currently at 0.9367 then we could see an acceleration towards the recent lows at 0.9330 which should again see decent buying interest. Under here, look further support at 0.9320 (61.8% of 0.9220/0.9505/18 June low) and then 0.9300. Below 0.9300 would see a run towards 0.9280 (76.4%) and as we said before, if the Aud breaks under 0.9250, then the downside could really accelerate, but at this stage is considered unlikely.

On the topside, 0.9400 will again be a bit of stumbling block, but if it can be overcome, look for a run up towards the 100 HMA at 0.9415 and then on towards 0.9430. With the 4 hour charts pointing lower, I don’t really see it up here again in the near term, but if wrong, above 0.9430 would again target 0.9450 and then last week’s top. Further out, the Aud would head on towards 0.9495(76.4% of 0.9757/0.8660) and to the 1 July top at 0.9505, a break of which, there would be little to stop it heading towards the 6 June high at 0.9543. Above here, the long term objective from the major head/shoulder reversal is at 0.9665.

Economic data highlights will include:

M:

T: New Home Sales

W:

T: AIG Mfg PMI, Building Permits, Private Sector credit

F: PPI, China NBS/HSBC Mfg PMI’s

Meta Trader – AxiTraderAUD/USD: Daily


NZDUSD: 0.8555
The Kiwi had a tough run after the RBNZ’s comments last week, signaling a pause in tightening after last week’s rate hike, and it looks as though we are unlikely to see it back at 0.8800 for quite a while, if at all.

Having come to rest on important support at 0.8538 (38.2% of 0.8051/0.8835) it could hang around here for a while, but with the dailies heading aggressively lower and backed up by the bearish divergence on the weeklies I suspect it will eventually head to the downside. The next target would be the base of the congestion at around 0.8475 and then below that at the 50% pivot of the move from 0.8051/0.8835 at around 0.8440, roughly where the 200 DMA also lies.

We are going to see the odd short squeeze, but I would be a little surprised now to see the Kiwi back to levels much above the 100 DMA, currently at 0.8625. If it does get towards here I would imagine it to be a decent sell opportunity, with a SL placed above minor descending trend resistance at around 0.8675.

Economic data highlights will include:

M:

T: ANZ Business Confidence

W: Building Permits

T:

F:

Meta Trader – AxiTraderNZD/USD: Daily


USD/DXY: 81.15


As we said last Sunday, “the DXY could well head higher towards 81.15, beyond which would be a tough nut to crack.” It finished right on 81.15 though and the momentum does appear to suggest further advances towards the next resistance at the 8 Nov 2013 high at 81.48, which again will be tough to break, having fallen away sharply on the last several occasions that it has been tested. If this can be overcome though, as the weeklies suggest is possible, then look for a bigger run up towards the 50% pivot of the move from 84.76 to 78.89 at 81.82. Beyond there could well see an acceleration towards the 61.8% Fibo level at 82.51, albeit that it is some way off yet.

On the downside, where dips look like buying opportunities, we may see a run back to 81.00 and below that to minor rising trend support at around 80.70. Below 80.60 would signal yet another upside failure and would revert back towards the 200 DMA at 80.25 and to the 100 DMA at 80.06, but these are looking increasingly distant and I don’t think they should come under pressure for a fair while.

As we said last week, continue to concentrate on the Euro and the Chf and leave the Yen alone. Gbp is also looking increasingly under pressure. This weeks FOMC, GDP and NFP will be crucial to see whether the dollar actually has the legs to continue its run higher.

www.tradingview.comUSD/DXY: Daily


DXY: Weekly