Daily Forex Market Preview, 08/02/2018
The European Commission released its quarterly forecasts yesterday and gave an upbeat assessment to the growth in the Eurozone. Inflation and unemployment were however more subdued in comparison. The forecasts show that inflation in the Eurozone will stay below the ECB’s 2% target rate in 2019 at only 1.6%.
In the overnight trading session, the RBNZ voted to keep the overnight cash rate unchanged at 1.75%. The decision comes after a weak fourth quarter inflation data and a somewhat mixed unemployment numbers for the quarter.
Looking ahead, focus shifts to Threadneedle Street as the Bank of England will conclude its monetary policy with the statement and press conference. The BoE is expected to keep rates unchanged at today’s event. Economists are divided on whether the BoE will leave forward guidance unchanged or whether it will bring forward the rate hike expectations. The BoE is currently expected to leave rates unchanged at least until August this year.
Elsewhere, the weekly unemployment claims from the U.S. will be coming out later in the evening.
EURUSD 08-02-2018 Intra-day analysis
EURUSD (1.2260): The euro currency extended declines against the USD yesterday as price was seen falling to a fresh monthly low. The declines come following the doji pattern that was formed. With price closing below the doji’s low, we expect to see further continuation in declines. Support is seen at 1.2091 on the daily chart which could be the first level of support. On the 4-hour chart the declines have invalidated the bullish flag pattern. Any near-term retracements could be seen stalling near 1.2336 or up to 1.2398 level. A retest of this level could suggest further declines with the eventual target seen at 1.2090.