17 July: Forecast: FX: US$/Majors: FXCharts

Technically, the initial support now lies nearby, at Friday’s low  (1.1390) and the 13 July low of 1.1370, below which could then run towards 1.1345/50 and then to 1.1310/15.

On the topside, the initial resistance will be seen at Friday’s high of 1.1470 and at 1.1485/90 ahead of 1.1500. Above here, only minor hurdles exist to stop the Euro from heading to the May 2016 high of 1.1616.

On the downside, while the hourlies are becoming oversold, the 4 hour/daily momentum indicators hint at lower levels ahead, and a break of 112.25 could bring about a decline to 112.00 ahead of a possible test of levels sub 111.70, but which should act as strong support if we get there. Below that, as we said before, the monthly cloud top is rising sharply and currently lies at 111.30, which should also see strong bids, but in the next 2 months will climb to 112.75 and then to 114.20 (Sept). We have not had a monthly close below the cloud top since Oct 2013.

On the topside, the daily charts look as though they are topping out, but if the hourlies do allow a bounce, then minor offers will arrive at various points ahead of  Friday’s high. This will again be strong resistance if/when we get there, but above which could revisit 113.80 ahead of 114.00. I don’t think we head up here for a while, but if wrong we could head back to the 114.49 trend high and further out, if we can take out the resistance seen at the 11 July high of 114.49, there is little to stand in the way of an attack on 115.00 and eventually higher.

On the topside, good sellers will be seen right ahead, at 1.3120, but above which there is little to stop Cable heading on towards 1.3200 and then to 1.3280. Above there would be increasingly bullish, possibly opening up the major Fibo pivot at 1.3420 (50% pivot of 1.5017/1.1821) although this currently remains over the horizon.

On the downside, back below the recent trend high of 1.3047 could retest 1.3000, a break of which could have us quickly back at Friday’s low of 1.2933 although this seems unlikely today.

The short term momentum indicators are mixed/flat and, on the downside, good support still lies at 0.9590/ 0.9600 although if this is taken out there is not too much to hold it up until 0.9550, where the 200 WMA has done a good job of propping the dollar up over the last couple of weeks. Below there would be a longer term concern for the dollar and could see a run back to previous, 2016 lows at 0.9520/30, to 0.9500, and potentially a fair bit lower.

On the topside, the dollar did its best on Friday to take out the nearby resistance, although 0.9700 once again proved a significant hurdle that is yet to be overcome. If taken out, then we could quickly head toward 0.9730 and then to 0.9745 although I don’t see it up here today.

More choppy trade looks likely within the 0.9600/0.9700 range, possibly until the ECB on Thursday. If anything I mildly prefer to trade from the short side but not convinced, especially if the SNB are underpinning the dollar.

Short term support lies at 0.7800 and back below there could see a return to 0.7775, where the Aud will find decent support. The charts certainly look positive although I am loathe to buy the Aud up here, and the RBA certainly will not be comfortable at these levels. It does look though as if 0.8000+ may lie ahead.