Intraday Technical Analysis 17 January

Eurozone inflation to fall to 1.9% in December 2018

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The markets continued to focus on Brexit which dominated the headlines for a second consecutive day. No less than 24 hours after the UK Parliament rejected the Brexit bill, the opposition party leader Jeremy Corbyn moved for a no-confidence motion against the government.

This led to the no-confidence vote to happen later in the day. The result was that Theresa May won the vote of no-confidence. This puts Brexit back into the headlines as the negotiations with the EU continue.

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Earlier in the day, the Bank of England governor, Mark Carney gave his testimony to the UK parliament. He said that the UK banks have enough capital to face with any extreme outcomes. Carney was confident that the recent surge in the GBP showed that a no-Brexit deal is not in sight.

The UK’s inflation data showed that headline consumer prices rose just 2.1% in December on an annualized basis. This was a slower pace of increase in consumer prices following November’s print of 2.3%.

The core inflation rate was however slightly higher, rising from November’s 1.8% to 1.9% in December on the year.
Data from the U.S. showed that import prices fell by 1.0% compared to the forecasts of a 1.3% decline.

The markets today start off with the Eurozone’s final inflation report for December. According to the preliminary flash estimates, Eurozone’s consumer prices were seen rising 1.9% on the year in December while core inflation was seen at 1.0%. This would mark a slowdown in the pace of inflation increase and comes as the ECB is starting to tighten monetary policy.

The NY trading session will see the Philly Fed manufacturing index data coming out. The index should increase to 10.1, up from 94 previously.

EURUSD intraday analysis

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EURUSD (1.1381): The EURUSD currency pair is looking to extend the declines down to 1.1200 level as price action is breaching past the minor rising trend line. The drops come following the failure of support at 1.1461. If price action posts a daily close below the minor rising trend line, we could expect the currency pair to push lower and potentially retest the lower end of the range. In the longer term, price action is seen staying flat within the levels of 1.1461 and 1.1200.

AUDUSD intraday analysis

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AUDUSD (0.7150): The AUDUSD currency pair is seen breaking out of its consolidation as price action is seen trading below the support level of 0.7191. The declines could potentially mark a retest of the support at 0.7022. In the short term, we could expect to see the AUDUSD retesting the current level of 0.7191 which could be tested for resistance. This could confirm the move to the lower support which has been pending retest for a while. As long as AUDUSD remains above 0.7022, we expect the bias to stay to the upside.

XAUUSD intraday analysis

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XAUUSD (1291.60): Gold prices inched higher to test intraday highs of 1295 before easing back. Price action remains flat, and the consolidation could potentially trigger a breakout in the near term. But with the 1280 support holding on any declines could likely stall at this level. Only a break down below 1280 will signal the move to the 1250 handle. As a result, we expect gold to remain trading flat at the current levels with multiple upside retest to the 1295 level. There is scope for gold prices to test the 1300 level to establish resistance.

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