Daily Forex Market Preview, 07/02/2018
The equity market selloff extended to the Asian and then to the European session yesterday. However, the selling was subdued towards the U.S. session close. The volatility index (VIX) however remains elevated. The U.S. dollar was little changed on the day.
On the economic front, UK's services PMI data, released yesterday, showed a decline in the sector. Overall, with the UK's manufacturing and construction sectors also coming out weaker, the data indicated that the UK's economy got off to a subdued start in January. The Bank of England will be meeting this Thursday.
In the overnight session, New Zealand's unemployment data showed that the unemployment rate fell to 4.5%, beating estimates of an increase to 4.7%. The quarterly employment change rose 0.5%, which was a slower pace compared to a 2.2% increase in the previous quarter.
Looking ahead, the RBNZ will be holding its monetary policy meeting later this evening. No changes are expected to interest rates at today's meeting.
EURUSD intra-day analysis
EURUSD (1.2391): The EURUSD formed a doji following two days of declines on the daily session. Price action suggests the potential for an upside move in the near term. The reversal comes as the EURUSD was seen briefly falling to the 1.2336 level. We expect to see some sideways consolidation taking place with the upside move likely to be limited. A lower high is expected on the 4-hour chart time frame for EURUSD to confirm the correction to the rally. As long as the previous highs at 1.2497 hold, we expect EURUSD to remain biased to the downside.
USDJPY intra-day analysis
USDJPY (109.30): The USDJPY tested the support at 108.64 following the test of resistance at 110.44 - 110.34 previously. Following the rebound, USDJPY is seen forming a lower high which could indicate weakness in the currency pair. The declines could stall near the previous resistance level of 108.64. However, if price breaks down below this support further declines cannot be ruled out. To the upside, further gains are expected only on a breakout above 110.44 - 110.34 level. In the near term, USDJPY could be seen moving sideways within the range established.
NZDUSD intra-day analysis
NZDUSD (0.7306): The New Zealand dollar briefly tested the resistance level at 0.7333 which had previously served as support. The declines off this level could be validated on a close below the previous lows formed at 0.7257. A close below this level will indicate further bearish momentum that will see the Kiwi dollar targeting the next support at 0.7160. To the upside, in the event that NZDUSD closes above 0.7333, the consolidation near the top could continue.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.