Daily Forex Market Preview, 02/07/2018
The euro currency was seen posting strong gains from the start on Friday. The gains came as news outlets reported that the EU summit saw the region’s leaders agreeing to solutions on the European migrant crisis.
The common currency also held its ground as economic data later in the day showed that headline consumer prices increased 2.0% on the year ending June 2018. This was broadly in line with the median estimates. Core CPI which strips the volatile food and energy prices were seen rising at a slightly slower pace of 1.0% on the year ending June. The month before, core CPI increased 1.1%.
Elsewhere, the UK’s GDP data showed a slightly higher revision. Data from the ONS showed that the GDP advanced 0.2% in the three months ending March 2018. This was a higher revision compared to the 0.1% increase that was reported in the previous two initial estimates.
Looking ahead, the economic calendar for the day will see the release of the manufacturing PMI reports from Spain, France and Italy. In the UK, the monthly manufacturing PMI data is expected to dip slightly to 54.1 down from 54.4 from May.
The U.S. trading session will see the release of the ISM’s manufacturing PMI data. Median estimates forecast that manufacturing activity eased to 58.2, down from 58.7 from the month before.
EURUSD intra-day analysis
EURUSD (1.1656): The EURUSD currency pair was seen posting strong gains on the day on Friday. With the strong momentum led breakout, price action is expected to eventually reach the resistance level of 1.1730. A retest of this level which failed to hold as support could keep the gains in check. However, a breakout above 1.1730 could potentially push the euro currency towards testing the minor resistance level of 1.1846 – 1.1824 region. This could potentially establish the 1.1730 level as support forming a new higher corridor for the currency pair in the short term.
USDJPY intra-day analysis
USDJPY (110.91): The USDJPY currency pair managed to seek out some gains as price action briefly broke past the resistance level of 110.62. Still, the fact that the breakout above level was not triggered by strong price action leaves the risk of a correction in prices. The 4-hour Stochastics remains in the overbought level which also validates this view. In the event of a correction, the USDJPY currency pair could be seen holding the declines onto the rising trend line once again.
XAUUSD intra-day analysis
XAUUSD (1251.26): Gold prices were seen posting a rebound after price action was seen consolidating near the lower trend line of the falling price channel. Still, the overall momentum remains weak and biased to the downside. The immediate resistance level near 1263 region is unlikely to be tested in the near term but remains a possibility. For the short term, a temporary bottom has been formed near the 1247 region. As long as prices hold above this level we expect to see gold prices moving in a sideways range.