Intraday Technical Analysis 27 February

Data from the U.S. showed that consumer confidence increased in February after the U.S. government shut down the previous month.

The data released by the Conference Board showed that consumer confidence increased to 131.4 in February after falling to 121.7 in the month before. This beat the forecast increase to 124.0.

Fed Chair, Jerome Powell started his two-day testimony to U.S. Congress. He affirmed the central bank’s decision to pause the rate hikes as they assess the impact of weaker global growth on the economy. Powell’s testimony didn’t have too much of an effect on the markets.

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Ahead of Powell’s testimony, data from the housing sector revealed that home prices increased in 2018 at one of the slowest paces in four years. The S&P Case Shiller home price index which measures the average home prices rose 4.7% on the year ending December 2018. This was a significant slowdown compared to 2017’s increase of 6.0%.

Housing starts data for December, one of the delayed reports due to the partial government shutdown showed a decline of 11.2% in December compared to the month before. This was the lowest level in nearly two years.

No deal Brexit possible only by consent of UK parliament

The British pound posted gains following news that PM May said the UK would leave the EU on March 29 without a Brexit deal only after the consent of the parliament. May said that the parliament could vote to delay Brexit if the deal were to be rejected. The sterling rose to the highest level since September last year on the news.

Oil prices stabilized a day after posting strong declines after Trump called out OPEC to do more to keep oil prices lower.

The day ahead – Powell’s testimony to continue

The Asian session today showed the release of Australia’s construction work done. Data showed a 3.1% decline in the fourth quarter of 2018. The median consensus estimate forecast an increase of 0.6%. The European trading session is relatively quiet with no major releases scheduled.

The NY trading session is expected to show Canada’s inflation report. Headline inflation is expected to rise by 0.2% after falling 0.1% the month before. The common CPI is expected to remain steady at 1.9%, unchanged from the previous months’ reading.

President Trump said the U.S. would be signing a few trade deals. The news came after he met with the North Korean leader, Kim Jong Un.

The Fed Chair, Jerome Powell will continue with testimony later in the evening. Factory orders report is expected to show an increase of 1.5%. This will reverse the 0.6% decline from the month before. The pending home sales report is also expected to rebound 0.8% after falling 2.2% on the month previously.

EURUSD Intraday Analysis

EURUSD (1.1376): The EURUSD currency pair posted some modest gains yesterday after price action was muted previously. On the 4-hour chart, the common currency has been a bit volatile over the past couple of sessions. Prices were seen forming bigger wicks. While currently, the EURUSD is seen easing back off the highs, the bias remains to the upside with the support area of 1.1327 – 1.1309 holding out. The upside target of 1.1435 remains a key level of resistance which could be tested.

USDJPY Intraday Analysis

USDJPY (110.66): The USDJPY currency pair has been easing lower after price action pared losses and tested the resistance area of 111.21. Minor support can be seen being established at 110.31 level. This will be tested to the downside if the current momentum pushes the currency pair lower. If this level holds, the USDJPY could be seen continuing to maintain its sideways range. However, if the minor support breaks, the USDJPY could extend the declines lower to the 109.74 level.

XAUUSD Intraday Analysis

XAUUSD (1327.22): Gold has been trading subdued with price action staying flat over the past three to four sessions. However, prices remain supported above the 1321.27 level which is yet to be tested firmly. There is scope for the support to be tested. However, it is also possible that gold prices could break past this support in the near term. There is a bearish flag pattern on the 4-hour chart which indicates the downside in gold prices. However, the declines are subject to gold breaking below the support level. The downside target is seen at 1340.91 level which would mark the breakout from the ascending triangle pattern that was formed previously.