Intraday Technical Analysis 18 February

Euro under pressure as Couere talks about TLTRO

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The U.S. dollar was seen easing back after briefly rising to a two month high. Economic data on the day was dominated by news about President Trump declaring a national emergency to fund the building of the border wall with Mexico.

The markets seemed somewhat muted to the news report on the day, but the sentiment could be affected given that this could potentially lead to a legal standoff.

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Euro slips on Cœuré’s comments on TLTRO

On the economic front, the euro slipped after Benoît Cœuré, one of the contenders as the next ECB President said that the central bank could restart its long term targeted operations financing program. Investors viewed this information as a sign of mounting weakness in the Eurozone economy.

This was not the first time; however, as the December ECB minutes showed that officials deliberated on whether to introduce the TLTRO program once again.

The UK’s retail sales report scored better than expected to rise by 1.0% on the month and beat estimates of a 0.2% increase. Previous month’s retail sales reports showed a 0.7% decline which was also slightly better than initial forecasts.

Trade balance figures from the Eurozone was in line showing 15.6 billion as expected.

Data from the U.S. showed that the regional manufacturing activity measured by the NY Fed showed the Empire State manufacturing index rising to 8.8 on the index. This reversed the drop to 3.9 in the month before and was well above the median forecasts.

Import prices, however, fell by 0.5% on the month which did not meet the estimates.

Looking ahead, the economic calendar today is relatively quiet. It is a bank holiday in the United States. There are not many financial reports scheduled on the day.

EURUSD Intraday Analysis

forex eurusd

EURUSD (1.1311): The euro currency came under pressure on Friday following the dovish comments from ECB’s Couere. The common currency, however, managed to recover from the short term losses and closed flat on the day on Friday. As a result, price action near the bottom has consolidated into a falling wedge pattern. This could indicate an upside breakout in prices. If the common currency manages to break out above 1.1327, we could expect the bullish momentum to push the euro toward 1.1435 level where the resistance level is pending a retest.

USDJPY Intraday Analysis

forex usdjpy

USDJPY (110.53): The USDJPY currency maintained its declines although price posted a brief rebound. However, by the closing hours, the USDJPY eased back those short term gains. We expect that the USDJPY is on track to slip back to the 109.74 level where support could be formed. The overall price action in USDJPY remains flat within the 111.21 and 109.74 levels of resistance and support respectively. A breakout from this range should establish the near term direction of the currency pair.

XAUUSD Intraday Analysis

forex gold

XAUUSD (1323.61): Gold prices turned bullish on Friday with the price action on the 4-hour chart indicating a breakout from the ascending triangle pattern. This also triggered an upside breakout from the bullish flag pattern. Price tested the previously established resistance level of 1321 before easing back. Gold prices need to post a follow through and close above 1321 to set the sights for the next upside target. While the ascending triangle on the 4-hour chart signals a move to 1323, the daily time frame bullish flag pattern gives an upside target of 1347 at the very least. If gold manages to establish support at 1315, we could expect to see some bullish momentum taking over.

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