Daily Forex Market Preview, 15/01/2018
The U.S. dollar plunged to a three year low on Friday as investors flocked to the euro amid rising optimism of accelerated growth. The U.S. dollar index closed last week at 90.60. The declines came following the BoJ’s surprise announcement to reduce its longer dated bond purchases and the ECB’s meeting minutes.
The ECB’s minutes showed that officials are hopeful of the economic recovery which could warrant a change to the central bank’s forward guidance.
On Friday, economic data from the U.S. showed that consumer price rose at a subdued pace. Headline inflation was seen rising 0.1% on a month over month basis, following a 0.4% increase in November. Core CPI was slightly better, rising 0.3% on the month. Retail sales were broadly in-line with estimates rising 0.4% on headline and core retail sales.
Looking ahead, the economic calendar is quiet today. The markets are likely to continue from Friday’s theme. The euro currency could see some further momentum as investors shape their expectations ahead of next week’s ECB meeting.
EURUSD intra-day analysis
EURUSD (1.2227): The EURUSD rose to a 4-year high on Friday, closing at 1.2196. The gains came as price broke past the technical resistance level of 1.2090 – 1.2070. The surge was led by a strong bullish momentum in price. However, at the current levels, EURUSD remains slightly elevated and could pose a risk of a correction. The previously established resistance level at 1.2090 – 1.2070 could remain under pressure as price could revisit this level to establish support. Renewed buying interest could be seen, but a break down below this level could send the euro falling to the 1.1900 levels in the short term.