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

Technically, below Monday’s low of 1.1435,  the initial support lies 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 again be seen 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 although I don’t think we see it up here today.

Look for a similar session ahead, with a chance of running stops above 1.1500, although if this does happen I doubt that we see too much follow-through to higher levels today.

Further range trade, near current levels, seems the most likely outcome today while waiting on the BOJ Meeting, due Thursday. On the downside, the dollar has found support at the Fibo level at 112.30, but a break of 112.25 could bring about a decline to 112.00 ahead of a possible test of 111.70, 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 we do see a bounce, then, once above the session high of 112.85 minor offers will arrive at various points (113.00/25) ahead of  14 July’s high at 113.57. 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.

The momentum indicators are a bit mixed, although the short term charts suggest minor weakness ahead. If so, on the downside, back below pivot of the session low/recent trend high of 1.3047 could retest 1.3000, a break of which could have us quickly back at 14 July’s low of 1.2933 although this seems unlikely today.

On the topside, back above 1.3000 would see good sellers once again at 1.3110/20, 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.

Once again, 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 peaked at 0.9658 on Monday. Above here could see a return to the 0.9675/85 minor resistance beyond which would revisit Friday’s high of 0.9700. This area should again prove a significant hurdle although if/when 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, generally within the 0.9600/0.9700 range, possibly until the ECB on Thursday. If anything, as with yesterday, I mildly prefer to trade from the short side but not convinced, especially if the SNB are underpinning the dollar.

The short term momentum indicators are now turning lower to allow some unwinding of their overbought condition although short term support now lies at 0.7790. Back below there could see a return to 0.7775, where the Aud will find decent support although a dovish outlook from today’s RBA Minutes may see that area taken out, allowing for a return towards 0.7750 and to Friday’s low of 0.7725.

On the topside, minor resistance will be seen at 0.7820 ahead of the 0.7838 high, which will be very strong should we see it although that looks doubtful today. However, the longer term charts are looking increasingly positive, and if the Aud does take out 0.7840, then we could open the way for a run towards 0.7900/75 and to 0.8000+.

The short term momentum indicators now point mildly lower although the dailies remain mildly constructive, and we could yet see a run back to the session highs although I would be doubtful of heading much above 0.7375 today unless the CPI figure is very strong. On the downside the initial support still lies at 0.7300/10, ahead of 0.7270/80 and the 13 July low of 0.7245. Late in the day (European lunchtime) we get the fortnightly Global Dairy Trade Index.