Daily Forex Market Preview, 12/07/2017
The US dollar was overtaken by the bearish sentiment yesterday. Lack of any clear fundamentals saw investor focus on the politics. A series of emails disclosed by President Trump’s oldest son showed that he cited support from Russia in the 2016 election campaign. The euro reversed its modest losses while gold prices also posted a comeback posting a reversal off 1204 lows.
Looking ahead, the economic calendar picks up the pace. In the UK, the ONS/ILO monthly jobs report data is expected to show that the average pace of wages increased just 1.8% compared to 2.1% previously. This would mark another slowdown in the pace of wage increases. The UK’s unemployment rate is expected to remain steady at 4.6%.
In Canada, the BoC’s interest rate decision is coming up. Economists are forecasting that the Canadian central bank will hike interest rates by 25 basis points at today’s meeting. This will bring the BoC’s interest rate to 0.75%, up from 0.50% previously.
The Fed Chair, Janet Yellen will also start her two-day testimony to the Congress and the markets will be eagerly awaiting for any comments from the Fed chair towards the interest rate and balance sheet normalization.
EURUSD intraday analysis
EURUSD (1.1478): The EURUSD closed bullish yesterday rising to a fresh 14-month high. The currency pair was seen comfortably closing above 1.1450, with price action currently testing the highs near 1.1477. On the 4-hour chart, the EURUSD is seen breaking past the previous resistance established at 1.1445 level. This resistance level could be briefly tested for support in the near term. As long as the support holds, EURUSD could be seen posting further gains. However, failure to bounce off the support level could signal a near-term decline towards 1.1311 where the next support level exists. The Stochastics oscillator on the 4-hour chart is signaling a bearish divergence which could suggest that the upside momentum could be weakening.
GBPUSD intraday analysis
GBPUSD (1.2849): The British pound continued its decline with price action forming an outside bar yesterday following the doji close the day before. Further declines could see GBPUSD extend the declines down to 1.2800 support level as a result. Off the 1.2800 support, we could expect to see a short-term bounce to the upside. This will keep GBPUSD range bound within 1.2900 and 1.2800 levels of resistance and support. A breakout from this range will likely determine further directional bias in the GBPUSD. Today’s jobs report could be one of the main catalysts for price action to post some declines. Alternately, any retracement to the upside could be capped near the resistance level of 1.2900.
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USDJPY intraday analysis
USDJPY (113.40): The USDJPY closed with a doji candlestick yesterday as price rallied to a fresh 2-month high. The price action in USDJPY is currently bearish, and we expect the declines to slip towards 113.36 initially. Bounce off this support level could result in a lower high being formed. Eventually, USDJPY could be seen breaking past 113.36 to retest the support level seen at 112.00. Further declines could see the currency pair testing the next main support level at 110.80.
