USD Consolidates Above 91.50 - Is A Rebound On The Way?

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Includes: DRR, ERO, EUFX, EUO, FXE, FXY, JYN, UDN, ULE, URR, USDU, UUP, YCL, YCS
by: Orbex
Summary

EURUSD closed with some losses on Friday and in the process, price action formed an inside bar near the current highs.

USDJPY extended gains for three consecutive days.

New Zealand dollar managed to complete its rally to the target area of 0.7160.

Daily Forex Market Preview, 08/01/2018

The U.S. dollar index settled at 91.74 on Friday, after price action was seen consolidating above the 91.50 handle over the past four daily sessions. On Friday, the December nonfarm payrolls data was released. Although not a blockbuster report, the payrolls showed that wages edged higher to 2.5% on the year, the unemployment rate held steady for a third consecutive month at 4.1%. The pace of jobs created in December was however smaller than expected.

The Greenback, which has been in a strong decline over the past few months, managed to stabilize. However, a lot remains up in the air regarding how the USD reacts from here on.

Economic data today is relatively quiet, meaning a slow start to the week. Data from the Eurozone will see the release of the German factory orders which are expected to rise at a slower pace. Bank of Canada will be releasing its business outlook survey. The report comes a week ahead of the BoC meeting next week. From the U.S., FOMC members Bostic and Williams will be speaking later in the day.

EURUSD intra-day analysis

EURUSD (1.2026): The EURUSD closed with some losses on Friday and in the process, price action formed an inside bar near the current highs above 1.20. The break out from this inside bar could potentially spell the next stage of gains or declines in the common currency. On the 4-hour chart, the EURUSD is seen falling away from the lower median line after price broke to the downside. With the exception of some consolidation taking place here, the common currency could be seen extending the declines towards 1.190 at the minimum in the near term. However, this scenario could change on a bullish close above 1.2090. This would keep the upside momentum intact although, in the longer term, the possibility of a correction to the rally remains high.


USDJPY intra-day analysis

USDJPY (113.21): USDJPY extended gains for three consecutive days, with Friday's session briefly rallying to highs of 113.30 before the dollar eased back to settle at 113.08. Price action remains trading within the consolidation pattern on the daily chart, as resistance at 114.07 remains a major hurdle. On the 4-hour chart, the reversal coincides with a medium-term trend line that has held on two past occasions. A continued follow through to the downside could mean that USDJPY could potentially signal declines to 112.04 level of support. The bias shifts to the upside if the currency pair can post a bullish close above the falling trend line.


NZDUSD intra-day analysis

NZDUSD (0.7155): The New Zealand dollar managed to complete its rally to the target area of 0.7160. Price action is showing some signs of exhaustion to the rally at this level. This is seen by the lower highs formed on the Stochastics oscillator. A convincing close below the previous low of 0.7144 could confirm the downside bias in price. The first support level that could be targeted comes in at 0.7062 which could mark the initial correction. However, further declines cannot be ruled out if price breaks down below this support. Expect to see a modest rebound off the 0.7062 with NZDUSD likely to make a lower high ahead of further declines to 0.6917.

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