Intraday Technical Analysis 22 February

Data from the eurozone shows that the final inflation rate for Germany fell 0.8% on the month as expected. The inflation rate for France also fell 0.4% but was slightly better than the estimates of a 0.5% decline.

The flash services and manufacturing PMI for Germany and France showed a moderate expansion in activity.

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However, Germany’s manufacturing sector declined to 47.6 according to the flash estimates. For the eurozone as a whole, manufacturing PMI contracted, falling to 49.2 and missing estimates of a decline to 50.3. Meanwhile, services PMI rose to 52.3 beating estimates of an increase to 51.4.

The NY trading sessions showed that durable goods orders in the United States rose 1.2%. This was well below the estimates of a 1.6% increase. Core durable goods orders rose 0.1% on the month, missing estimates of a 0.3% increase.

Markit also released the flash services and manufacturing PMI reports for the U.S. data. It showed that while manufacturing activity slipped to 53.7, services activity rose to 56.2.

The existing home sales report which came out later showed a decline to 4.94 million compared to estimates of 5.01 million.

The markets today will be focusing on the final inflation figures from the eurozone as well as the final GDP numbers from Germany. Germany’s fourth-quarter GDP is expected to see a flat print for the month compared to previous estimates of a 0.1% increase in GDP.

The inflation report for the eurozone is expected to show that headline CPI increased 1.4% on the year in January, while the core inflation rate is expected to be confirmed rising 1.1% on the year.

Canada will be releasing its retail sales report later today. Headline retail sales are expected to remain flat while core retail sales are set to fall 0.5% on the month.

The remainder of the day will see a number of central bank speeches. The ECB President Draghi will be speaking followed by FOMC members, Clarida, Bullard, Quarles, and Williams.

EURUSD Intraday Analysis

EURUSD (1.1334): The EURUSD currency pair has repeatedly been testing the support at 1.1327. Price action has held this level firmly so far. This opens the bias to the upside as the EURUSD could be seen attempting to push higher.

The swing high near the 1.1350 level will need to be breached for price to post fresh highs. The longer-term target is seen at 1.1435, which remains the main upside target for the moment. Alternately, if the support gives way, the EURUSD currency pair could be seen consolidating near the support area of the 1.1327 – 1.1309 region in the near term.

USDJPY Intraday Analysis

USDJPY (110.77): The USDJPY continues to maintain a rather flat position. Price action remains firmly stuck between the111.21 and 109.74 region. In the near term, the upside target could be tested which will mark the completion of the bullish ascending triangle pattern. The declines are limited to 109.74, subject to the swing low at 110.24 being breached.

XAUUSD Intraday Analysis

XAUUSD (1324.61): Gold prices extended declines strongly just a day after the Fed meeting minutes. Price action fell to the support level of 1321.58 which marked the resistance level of the bullish flag pattern previously.

A firm retest of this level could potentially see a reversal off the support. This could put gold prices to trade sideways within the 1347 and 1321 levels in the near term. The upside bias is still intact, and this could mean that gold prices could attempt to break out above the 1347 level.

To the downside, if the support at 1321 gives way, we could expect to see further declines. For the moment, watch for a lower high to be formed below the 1347 level following which a retest of 1321 could confirm the downside.