Daily Forex Market Preview, 26/01/2018
The U.S. dollar was met with another volatile day as late in the day the U.S. President sought to clarify the Treasury Secretary Mnuchin’s comments on preferring a weaker dollar. The greenback was seen extending declines earlier in the day as the ECB left the monetary policy unchanged. With Mario Draghi not addressing the exchange rate of the euro, the common currency briefly rallied to a fresh 4-year high only to reverse the gains by the close of business.
The economic calendar was sparse besides the ECB meeting. Canada’s core retail sales continued to accelerate, rising 1.6% on the month and beating estimates of a 0.8% increase. Headline retail sales however rose just 0.2% and missed estimates of a 0.7% increase.
Looking ahead, GDP data across the UK, Canada and the U.S. will keep the markets busy. The UK’s preliminary GDP is expected to show that the economy advanced 0.4% on the fourth quarter. Canada will be releasing the inflation data which is expected to show a 0.3% decline erasing the increase from the previous month. The U.S. advance GDP report is expected to show a modest increase of 3.0% in the GDP. Later in the day, BoE and the BoJ governors will be speaking at the World Economic Forum in Davos.
EURUSD 26-01-2018 Intra-day analysis
EURUSD (1.2422): The EURUSD touched a fresh 4-year high as the intraday rally saw prices reaching for 1.2537. However, the euro gave back the gains rather quickly with the daily session closing with a doji candlestick pattern. Currently, we see some retracement taking place but the gains could be short lived. Initial support is seen at 1.2281 which could be tested if the downside momentum increases. A break down below this level could see the EURUSD extend the declines down to 1.2090 – 1.2070 levels. To the upside, unless price action closes strongly above the 1.2400 handle on the daily basis, we expect the EURUSD to turn flat near the current highs.