The US dollar remained rather subdued yesterday and is seen breaking past late May lows. The weakness in the greenback comes amid a soft non-manufacturing PMI report from ISM. The index fell to 56.9 in May, missing estimates of 57.1 and weaker than April’s headline print. Factory orders were also seen contracting 0.2% after rising 1.0% in the previous month.
Among commodities, oil prices took a hit after Saudi Arabia, Egypt and Bahrain severed diplomatic ties with Qatar. The nations accused Qatar of supporting terrorist groups. Oil prices initially rose to session highs of $48.40 before giving up the gains and settling at $47.39.
Looking ahead, the RBA’s interest rate decision saw no major changes to monetary policy. In the eurozone, the Sentix investor confidence is expected to rise modestly to 27.6, up from 27.4 previously while the Ivey PMI from Canada is expected to show a headline print of 62.0, slightly lower than 62.4.
EURUSD intraday analysis
EURUSD (1.1266): EURUSD formed an inside bar with price action staying firm within Friday’s range high and low. Price action briefly tested the support level at 1.1245 before bouncing off to close above the support. We expect that EURUSD will now continue to push higher especially with the inverse head and shoulders pattern that has emerged at the top. This suggests a continuation to the upside with the next target at 1.1300 followed by 1.1383. The bias changes if EURUSD slips below 1.1245 support level in which case the bullish inverse head and shoulders pattern on the 4-hour chart will be invalidated.
GBPUSD intraday analysis
GBPUSD (1.2977): GBPUSD continues to maintain a modest uptrend, but the price is seen testing 1.1293 resistance level. A reversal here could see a potential decline in the near term. On the 4-hour chart, there is evidence of a head and shoulders pattern that is shaping up and should be confirmed on a reversal around 1.1293. This pattern could, however, be invalidated if GBPUSD pushes towards 1.3000. To the downside, expect the price level at 1.2800 likely to offer some support but a break down below this level will trigger a move to 1.2600.
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XAUUSD intra-day analysis
XAUUSD (1284.55): Gold prices are continuing to push higher following the breakout at 1274.00 resistance level. Price action is seen currently filling the gap from April 21 at 1284.87. In the near term, we can expect to see a short term decline back to 1274.00 where support can be established at the previous resistance level. This will keep the bias to the upside with the potential for gold prices to reach as high as 1300.00. To the downside, a break down below 1274.00 will, however, keep gold prices range bound with the bias turning lower below 1263.00.
