Daily Forex Market Preview, 01/08/2017

The US dollar weakened on the last trading day for July. The month end buying saw the greenback post fresh lows which sent its peers such as the EURUSD to a new two and half year highs.

Economic data from the Eurozone yesterday saw the flash inflation estimates for July remaining stable. Headline inflation remained steady at 1.3%, but core inflation rose to 1.2% from 1.1% previously. The unemployment rate fell to 9.1% in June. This was better than 9.2% revised estimates post for the month of May. The overall positive data helped to push the common currency higher.

Looking ahead, economic data today will be busy, starting with the US ISM manufacturing PMI. Economists polled expect to see the manufacturing index slip to 56.4 after the index rose to 57.8 in June. New Zealand will be releasing the quarterly unemployment data as well. Expectations call for the NZ unemployment rate to fall to 4.8% on the quarter.

EURUSD intraday analysis

EURUSD (1.1824): The EURUSD rally continued to power ahead with full steam with the common currency breaching past 1.1800 to rise to a fresh two and a half year low. The gains came on renewed optimism that the ECB could tighten monetary policy.

This was after the flash eurozone inflation estimate release and a better than expected unemployment data. The strong surge in the currency pair puts the downside in question. Support is now likely to be established at 1.1748 which marked the previous high befre price action broke past this level with a strong bullish candlestick pattern. Any declines could be expected only on a breakdown below the 1.1748 support, in which case expect to see the next support at 1.1635 coming into question.

XAUUSD intraday analysis

XAUUSD (1269.69: Gold prices remained rather flat yesterday with price action trading close to the 1270 levels. The daily session closed with a doji following the strong gains off 1259 level previously. There is also the potential for a correction with the daily session’s Stochastics oscillator showing a higher high against price’s lower high. On the 4-hour chart, the rising wedge pattern signals caution of a downside risk. Failure to break past the 1270 handle could keep gold prices subdued with the possibility to fall towards 1259 – 1260 levels where support is formed.

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GBPJPY intraday analysis

GBPJPY (145.56): GBPJPY has been trading flat for the past couple of sessions. Price action is seen consolidating within the 146.85 resistance and 145.00 support levels. This comes after the previous strong rally sent GBPJPY towards the highs near 147.55. Support is seen at 142.28. However, for this support level to be tested, GBPJPY will need to make a convincing close below 145.00 support level as a result. To the upside, any gains will likely struggle to break past the 147.55 resistance level. With the BoE’s meeting lined up this week, GBPJPY could be seen maintaining a flat bias into the event.

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