Daily Forex Market Preview, 14/08/2017

The US inflation data for July was disappointing as data showed that consumer prices rose 0.1% on the month. This was below the forecasts of a 0.2% increase. However, on a year over year basis, consumer prices were seen rising 1.7% in July. This is slightly higher than June’s 1.6%.

In the backdrop, the US – North Korea narrative continues to be the main theme. Investors continued to scale back their risky bets, as a result sending the safe haven currencies and assets higher. However, the markets were seen opening on an optimistic note earlier today.

Earlier in the day, Japan’s GDP data showed a 1.0% increase in economic activity on a quarterly basis. This was stronger than the forecasts of a 0.6% increase that was penciled in by economists. On a year over year basis, Japan’s GDP has advanced 4.0%, beating estimates of a 2.5% increase and accelerated from the 1.5% increase registered during the first quarter.

Looking ahead, the economic calendar is light today with only the Eurozone industrial production numbers coming up. Forecasts point to a 0.4% decline.

EURUSD intraday analysis

EURUSD (1.1826): The euro posted strong gains on Friday after briefly trading flat the previous two days. The currency pair managed to rally back above the 1.1800 level and thus broke above this short-term support/resistance level. The rally towards 1.1835 and the prompt pullback on the day suggests that we could see some near-term consolidation. Support is seen at 1.1730 which is likely to be the range that the EURUSD could move into. Unless the FOMC meeting minutes this week turn out to be strongly hawkish, no major new gains are expected in the EURUSD. Watch for a break out above 1.1835, in which case, we can expect further gains towards 1.1900, while to the downside a break down below 1.1730 would suggest a decline to 1.1635.

GBPUSD intraday analysis

GBPUSD (1.3016): The British pound will be heading into a busy week. As expected price action rallied back to retest the resistance level at 1.3025. This near term pullback will suggest that price action could be looking to post a reversal. Friday’s gains saw GBPUSD close with an outside bar. However, on the 4-hour chart, the reversal is currently taking shape. This would suggest a near-term decline. Support at 1.2818 remains in focus for the cable. Alternately, a breakout above 1.3025 will send the currency pair back to retest the next upper resistance level at 1.3117.

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USDJPY intraday analysis

USDJPY (109.42): The USDJPY closed on Friday with a near doji candlestick pattern after breaking down below 109.58. Any retracements will come only on a strong rebound back above the 109.58 levels. On the 4-hour chart, the near-term resistance level is seen at 109.70. Therefore, any meaningful retracement can be expected only on a breakout above this level. For the moment, any downside is likely to be limited to the current level which was previously tested in early June this year.

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