Intraday Technical Analysis 01 March

The U.S. dollar maintained strong gains at the close of the last trading day of the month. The markets were somewhat mixed following news that President Trump’s meeting with the North Korean leader ended without results.

On the economic front, Switzerland’s GDP in the fourth quarter of 2018 increased by 0.2%. This was slightly below the consensus estimates of a 0.4% increase. However, the third quarter GDP went down, showing a 0.3% decline during the period.

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From the eurozone, Germany’s import prices fell 0.2% in January. These missed initial estimates of a 0.2% increase. The declines come after import prices fell 1.3% on the month previously. Preliminary inflation reports showed that consumer prices stabilized, rising 0.5% on the month in February and matching estimates. Inflation estimates for France, however, showed an unchanged print. Meanwhile, Spain’s inflation was at 1.1% for the year, according to preliminary estimates.

The NY trading session saw the release of the fourth quarter GDP report. Beating estimates, GDP advanced 2.6% during the three months ending December. Economists expected GDP to rise just 2.2%. The third quarter GDP lowered to show a 3.4% increase. The GDP price index gained 1.8% which was also above estimates.

Chicago PMI data showed that the index rose to 64.7, following a soft reading of 56.7 the month before.

The markets look to the first trading day of March. The Asian trading session showed that the Tokyo core CPI rose 1.1%. Economists polled forecast a 1.0% increase on the year.

The Fed Chair, Jerome Powell had been speaking at an event earlier in the day.

The European trading session will see the release of the manufacturing PMI report coming out. The manufacturing sector is expected to remain weak with the index forecast to fall below the 50-level at 49.2. This would signal a contraction in the manufacturing activity.

The UK’s manufacturing PMI could likely hold steady, easing to 52.0 from 52.8 in January. Flash inflation estimates from the eurozone will follow this data, with headline inflation is likely to rise by 1.5%. This would mark a modest increase from 1.4% previously. Core inflation will most probably hold steady at 1.1% on the year.

Data from Canada will see the monthly GDP report which could show no change during the month. From the U.S. the core PCE price index report is forecast to rise 0.2% on the month while personal spending and income could likely rise 0.3% and 0.5% respectively.

The ISM will be releasing its manufacturing PMI later in the day, which could ease to 56.0 after rising to 56.6 in January.

EURUSD Intraday Analysis

EURUSD (1.1373): The EURUSD currency pair was retracing the gains from the previous sessions yesterday. Price action remains flat in the medium to long term, and the retracement could see prices falling back to the 1.1327 level of support in the near term. With the resistance level at 1.1435 being established and yet to be tested, we expect the common currency to remain subdued into next week. This will be as the ECB meeting is due to be held. In the near term, the support level at 1.1327 – 1.1309 is likely to see price action forming a base. As long as this support holds, the EURUSD will remain range-bound with the bias to the upside likely to be tested in the near term. If the currency pair slips below the support level, then EURUSD could ease lower toward 1.1256.

USDJPY Intraday Analysis

USDJPY (111.66): The USDJPY currency pair maintains its bullish moment. Price action broke past the sideways range formed between 111.31 and 109.74. The breakout to the upside could see the USDJPY retesting the level to establish support at 111.31. Such a move could potentially make way for further gains in the currency pair. The next main resistance to the upside comes in at the 112.50 level. This previously served as support before price broke past it.

XAUUSD Intraday Analysis

XAUUSD (1312.65): Gold prices extended strong declines for the second consecutive day. After clearing the support level at 1321.58, price briefly tested intraday highs of 1327.18 before pulling back. On the 4-hour chart, we expect the declines could push lower to the minor support level at 1306 level. A rebound off this level could see gold prices retracting back to the breached support level at 1321.58. This would potentially create a head and shoulders pattern with the neckline support at 1306. It could also set the stage for further declines. Alternately, a continuation to the downside will see gold prices extending the declines to the 1300 round number support.