Daily Forex Market Preview, 24/07/2017

The US dollar closed a second consecutive week with declines. Attributing to the weak sentiment was a mix of political and economic factors. Troubles continue for the Trump administration, and news sources revealed that the Russian hacking scandal could now extend into Trump’s business holdings as well. Most recently, Sean Spicer, the White House press secretary resigned. The uncertainty about the Trump administration alongside the Fed sitting on its hand saw the greenback decline.

As a result, the euro managed to maintain its gains at two-year highs into Friday’s close. The common currency got a vote of confidence as investors bought the euro after interpreting the ECB’s statements and Mario Draghi’s comments last Thursday.

Looking ahead, Monday will see the flash manufacturing and services PMI figures for July from the eurozone. Later in the day, the US flash PMI’s will also be coming out with expectations showing a relatively stable number for July.

EURUSD intraday analysis

EURUSD (1.1671): The EURUSD maintained its strong gains as EURUSD touched highs of 1.1682. This marked a two-year high in the currency as investors prepare for the European Central Bank to announce the second tapering to the ECB’s QE program sometime in autumn. Still, there is scope for disappointment as any tapering is likely to take place only in January or in the early months of next year.

Technically, EURUSD’s rally looks a bit overstretched which makes it a bit difficult to take long positions at the current levels. In the short term, support is seen at 1.1475 which could be tested. However, any downside bias is likely to be established only on a convincing close below 1.1635. With the ECB expected to tighten QE, investors will no doubt be focusing on the economic data from the eurozone.

GBPUSD intraday analysis

GBPUSD (1.3016): The British pound wasn’t able to capitalize much on the US dollar weakness. As a result, the GBPUSD fell below 1.3000 last week after briefly rising to levels above 1.3100. Price action suggests an inside bar that was formed on Friday. A breakout from this level will dictate the next leg.

Resistance is seen at 1.3025 with the daily chart showing a consolidation into a rising wedge pattern. A reversal near 1.3025 region could potentially support the bearish case for GBPUSD to decline back to 1.2818 – 1.2800 levels. In the event that GBPUSD manages to break past 1.3025, then establishing support at or above this level could indicate further bullish gains in the cable.

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USDJPY intraday analysis

USDJPY (111.05): USDJPY extended declines, touching a 3-week low. The yen strengthened despite the BoJ standing pat on policy and reiterating its commitment to maintain the QE purchases. With USDJPY now completing the measured target objective of 111.08, we expect to see a near-term rebound to the upside. There is, however, the scope of further declines down to 110.80 which will mark the correction to the previous rally.

Still, USDJPY could be seen maintaining the bearish bias. Resistance is seen at 111.78 and only above this level can we expect to see the bullish bias gain confidence. In the near term, USDJPY could stay range bound within 111.78 resistance and 110.08 support.

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