Daily Forex Market Preview, 07/02/2018
The equity market selloff extended to the Asian and then to the European session yesterday. However, the selling was subdued towards the U.S. session close. The volatility index (VIX) however remains elevated. The U.S. dollar was little changed on the day.
On the economic front, UK’s services PMI data released yesterday showed a decline in the sector. Overall, with the UK’s manufacturing and construction sectors also coming out weaker, the data indicated that the UK’s economy got off to a subdued start in January. The Bank of England will be meeting this Thursday.
In the overnight session, New Zealand’s unemployment data showed that the unemployment rate fell to 4.5% beating estimates of an increase to 4.7%. The quarterly employment change rose 0.5% which was a slower pace compared to a 2.2% increase in the previous quarter.
Looking ahead, the RBNZ will be holding its monetary policy meeting later this evening. No changes are expected to interest rates at today’s meeting.
EURUSD 07-02-2018 Intra-day analysis
EURUSD (1.2391): The EURUSD formed a doji following two days of declines on the daily session. Price action suggests the potential for an upside move in the near term. The reversal comes as the EURUSD was seen briefly falling to the 1.2336 level. We expect to see some sideways consolidation taking place with the upside move likely to be limited. A lower high is expected on the 4-hour chart time frame for EURUSD to confirm the correction to the rally. As long as the previous highs at 1.2497 hold, we expect EURUSD to remain biased to the downside.