Intraday Technical Analysis 22 January
New Zealand inflation expected to have been flat in December
The British pound posted modest gains on the day after it became evident that the UK government was pursuing a plan B. The details include amending the Irish border backstop arrangement as well.
On the economic front, data from Germany showed that producer prices fell by 0.4% in December. This was more than forecasts of a 0.1% decline estimated by economists. The December’s declines come following a 0.1% increase in the month before.
The Bank of Japan’s core inflation rate increased 0.4% in December. This was slightly lower than the median estimates which forecast a 0.5% increase. The BoJ’s core inflation rate rose 0.5% in November.
The European trading session will start off with the UK’s monthly jobs report. The average earnings index should remain steady, rising by 3.30%. This marks the same pace of increase compared to the previous period. The unemployment rate remains steady at 4.1%.
From the Eurozone, the German ZEW economic sentiment index is due later in the data. Economic sentiment drops even more with the index expected to fall to -18.8, down from -17.5 previously. Eurozone’s ZEW economic sentiment index is next which should ease to -20, compared to -21.0 prior.
The NY trading session will see Canada’s manufacturing and wholesale sales coming out. In the U.S. the existing home sales report is due to show a modest slowdown with 5.27 million units in December compared to 5.32 million units previously.
Later in the overnight session, New Zealand will be releasing its quarterly inflation report. New Zealand inflation should remain flat during the fourth quarter of 2018.
EURUSD intraday analysis
EURUSD (1.1357): The EURUSD currency pair continues to remain weak as price action is seen testing the previous lows at 1.1358. A close below this level could extend the euro’s declines down to 1.1334 level of support. The longer-term support remains at 1.1275 region which will come in as the next target to the downside. Any rebound off the current level could see the falling trend line being tested for resistance once again. The overall bias in the EURUSD remains to the downside.
AUDUSD intraday analysis
AUDUSD (0.7137): The Australian Dollar weakened as price action posted a brief retest of the resistance level at 0.7191. Failure to close above the resistance level put the downside pressure in price. With the price extending the declines from the resistance level, the AUDUSD could go through for a retest to the lower support at 0.7022. The drops could initially stall at 0.7050 which marks the 38.2% Fibonacci retracement level followed by the retest of the lower support.
XAUUSD intraday analysis
XAUUSD (1277.66): Gold prices touched down to the 1280 handle and price action closed below this level. With the Stochastics oscillator in the oversold levels, we could expect to see a correction if the momentum stalls. A clean break of the 1280 handle is required. Therefore, there is scope that if gold prices decline further, we could expect the 1280 handle to be tested for resistance. Alternately, we could see price action consolidating around this level for the near term.
