Daily Forex Market Preview, 06/06/2018
The U.S. dollar was seen trading mixed on Tuesday. The declines came despite a strong non-manufacturing PMI report from ISM. The ECB President, Mario Draghi was scheduled to speak on Tuesday but the meeting was called off. Meanwhile, the new Italian Prime Minister Giuseppe Conte gave his speech where he touched upon the manifesto of the coalition government which included rejecting austerity measures. The Euro was little changed on his comments.
The RBA’s monetary policy meeting did not see any major changes as the central bank held interest rates unchanged at 1.50% as widely expected. Markit’s services PMI data from the Eurozone showed that services sector activity eased to 53.8, down from April’s print of 53.9. In the UK, the services sector activity rebounded to 54.0 beating estimates of a modest increase to 52.9.
In the U.S. trading session, the ISM’s non-manufacturing PMI data showed a strong increase to 58.6 which was above estimates of 57.9 and higher than April’s 56.8.
Earlier in the day, Australia’s quarterly GDP data showed a 1.0% increase in the first quarter. This was higher than the estimates of a 0.9% increase and the GDP advanced from a revised 0.5% in the fourth quarter of 2017.
Looking ahead, the economic calendar for the day includes the trade balance figures from Canada which will later be followed by the U.S. non-farm productivity report.
EURUSD intra-day analysis
EURUSD (1.1722): The EURUSD currency pair was trading subdued on Tuesday with price action confined to the resistance level of 1.1730. As the EURUSD trades within the resistance level of 1.1730 and 1.1610 we expect to see this range breaking in the near term. An upside breakout could potentially signal a correction to the sharp declines seen over the past few weeks. There is a possibility that the EURUSD could retest the main resistance level at 1.2232. To the downside, declines are likely to stall at 1.1610 – 1.1577 level of support.
USDJPY intra-day analysis
USDJPY (109.88): The USDJPY currency pair was seen falling back to the support level of 109.57 – 109.43 region. The retest of this support level could potentially see further gains in store. To the upside, the test of resistance at 110.62 is very likely. Alternately, a breakdown below 109.57 – 109.43 level could signal a deeper decline with the next lower support at 108.90 being the likely target.
XAUUSD intra-day analysis
XAUUSD (1297.40): Gold prices eased on the day as price action was seen drifting lower. However, the higher low that was formed is likely to signal a possible breakout above 1304 – 1301 level of resistance. Currently, gold prices are seen testing the dynamic resistance off the falling price channel. The downside is expected to be limited but another retest of support at 1282 cannot be ruled out. Overall, gold prices are looking to form a bottom around the 1282 level ahead of an upside breakout that is in store.