Intraday Technical Analysis 5 September

BoC to keep interest rates unchanged

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technical analysis september

Daily Forex Market Preview, 05/09/2018

The U.S. dollar posted strong gains on Tuesday since the start of the European trading session. The USD jumped on the strong manufacturing PMI report. Data from the Eurozone was quiet.

The British pound continued to weaken as construction activity as measured by the PMI fell to 52.9. This was below forecasts and was the first decline after three consecutive months of gains.

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The NY trading session showed that the ISM’s manufacturing PMI gauge rose strongly to 61.3 in August. This beat estimates of a 57.6 forecast and a strong rebound from July’s 58.1.

Construction spending data was however slightly weaker as activity increased just 0.1% on the month which was below forecasts.

Earlier today, the quarterly GDP report from Australia showed that the economy advanced 0.9% on the second quarter. This was higher than the forecasts of a 0.7% increase. The first quarter GDP data was also revised higher to show a 1.1% increase.

The European trading session will be dominated by the services PMI reports from the Eurozone including Spain, Italy, Germany, and France. The composite services PMI for the Eurozone is expected to remain steady at 54.4, unchanged from the month before.

In the UK, services PMI is forecast to rise modestly to 53.9. This comes following July’s headline print of 53.5.

The NY trading session will see the Canadian trade balance figures coming out. Later in the day, the Bank of Canada will be holding its monetary policy meeting. No changes are expected to the overnight cash rate which is expected to stay put at 1.50%.

EURUSD intraday analysis

eurusd

EURUSD (1.1595): The euro currency extended declines briefly touching down to 1.1540 on a stronger greenback. The currency pair promptly reversed the losses but closed bearish on the day. The sharp retest of the support level led to a rebound in price action which is currently capped by the 20-day moving average. A decline back to 1.1540 is expected in the near term. An expected reversal of the 20-period moving average could see price action retesting 1.1540 more firmly. Following this, we expect to see a rebound back to 1.1626 levels or even higher. To the downside, a break down below 1.1540 could trigger further declines down to 1.1366.

GBPUSD intraday analysis

gbpusd

GBPUSD (1.2861): The British pound extended the declines down to 1.2808 level of support on Tuesday. The declines came on a weaker construction PMI report. In the near term, we expect to see a retest of the support level. We expect this support to hold and a rebound off the support could trigger a potential head and shoulders pattern. The upside target is seen from Friday’s close of 1.2959. The formation of the head and shoulders pattern brings the expectation of a downside decline. GBPUSD could likely fall to 1.2671 on a successful head and shoulders formation.

XAUUSD intraday analysis

xauusd

XAUUSD (1193.34): Gold prices closed bearish on Tuesday with the downside breakout likely coinciding with a steep bearish flag pattern. The next main downside target is seen at the support level of 1180.25. On the 4-hour chart, we expect to see a slight retracement back to 1197.50. Establishing resistance here could confirm the downside toward 1180.25. Alternately, if gold prices breakout above 1197.50 further gains can be expected as the bearish flag pattern would be invalidated.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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