Daily Forex Market Preview, 31/08/2017

The greenback posted strong gains, rising on the back of a better than expected private payrolls report and a revised second quarter GDP. Official data showed yesterday that private sector hiring in the US added 237k jobs. This was higher than the forecasts of 185k while July’s private payrolls were revised up to 201k. The second quarter GDP report showed that the US economy expanded at a pace of 3%, beating estimates of 2.7% and better than the initial reading of 2.6%.

Looking ahead, the economic calendar today covers the preliminary CPI from France, followed by the Eurozone’s CPI data. Headline inflation is expected to accelerate 1.4%, after rising 1.3% in July. Core CPI is however forecast to remain steady at 1.2%. In the US the core PCE data will be coming out later. Forecasts point to a 0.1% increase on a month over month basis.

EURUSD intraday analysis

EURUSD (1.1877): The EURUSD extended the declines yesterday with price action falling to test the first support level at 1.1882. Further declines could see the common currency falling to the next main resistance level at 1.1825. A rebound off either of these two levels is quite possible which could see some near-term upside in prices. However, watch for a lower high being formed as a result of this bounce which could signal the start of the correction towards 1.1688. Resistance can be seen forming around 1.1963 which could see a near term reversal. EURUSD could potentially stay range bound within these levels following which a breakout trade might occur. To the upside, above 1.1963, further gains could push EURUSD past the 1.20 handle, while to the downside we expect a test of 1.1688.

GBPUSD intraday analysis

GBPUSD (1.2910): The British pound managed to maintain some gains in yesterdays trading. Price action remains flat at the moment, but the medium-term bullish momentum could push GBPUSD further to the upside. The resistance level of 1.3033 could be the near-term test for the currency pair. For the moment, GBPUSD is seen retesting the support level at 1.2908. As long as this support holds, we can expect to see some near term gains. This is also validated by the fact that GBPUSD managed to break past the falling trend line and the previously held support level is now the prime target for resistance to be established.

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USDJPY intraday analysis

USDJPY (110.53): The USDJPY is seen making strong gains for what could be a third consecutive day. This comes after price retested the support level near 109.15 – 108.26. The resistance at 110.72 is now in focus, and we could expect the price to struggle to break out above this level. Therefore, a near-term decline could be expected. Support is seen coming in at 109.75 which previously served as minor resistance. A retest back to this level to establish support will validate the upside with USDJPY likely to break past 110.72 followed by a potential rally towards 113.00.

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