Daily Forex Market Preview, 02/08/2018
The U.S. dollar strengthened as the Federal Reserve left the interest rates unchanged at its meeting yesterday, as expected. The central bank upgraded its U.S. economic growth to solid; underlining the fact that further rate hikes are imminent.
Earlier in the day, economic data showed that the private payrolls added 219k jobs during the month, beating estimates of 186k. The ISM’s manufacturing PMI disappointed, however rising to 58.1 on the index which was below forecasts.
In the UK, the manufacturing PMI was seen at 54.0, slightly below estimates of 54.2.
Looking ahead, economic data today will cover the UK’s construction PMI. The index is expected to ease to 52.8 from 53.1 last month.
The Bank of England’s monetary policy meeting is scheduled later in the day. Interest rates are expected to rise 25 basis points to 0.75% at today’s meeting.
EURUSD (1.1650): The EURUSD currency pair was seen extending its declines following the failure to break past the resistance level on Tuesday. Price action reversed the gains and is seen trading near the previous lows formed. On the 4-hour chart, the currency pair is expected to test the minor rising trend line which is likely to form an ascending triangle. A rebound off this rising trendline could signal near-term gains which can be confirmed on a close above 1.1688. Still, the Common Currency will need to break past 1.1742 to confirm the upside.
USDJPY (111.54): The USDJPY currency pair extended gains briefly, rising to highs above 112.00. However, the gains quickly disappeared as the currency pair gave up the gains. Still, with the USDJPY trading above the major trend line, we expect the gains to hold in the near term. Price action is likely to consolidate near the current levels with the resistance level at 112.28 likely to be tested in the near term. A break down below the trend line could see the previous support level coming into the picture.
XAUUSD (1218.87): Gold prices are seen consolidating into a triangle pattern near the current support level around the 1219 region. With the divergence on the 4-hour chart building up, we anticipate a possible upside breakout. However, with gold prices closing on a bearish note, there is scope for a downside decline as well. To the upside, a successful breakout could trigger further gains toward the 1242 level. Alternately, a close below 1219 support could send gold prices falling toward the 1200 round support number.