Daily Forex Market Preview, 10/01/2017
The British pound extended losses by the end of the day yesterday closing at a 3-month low of 1.2162 on renewed concerns of a "hard" Brexit. The British PM, May told on Sunday that Britain would not keep "bits" of EU membership sparking concerns of a "hard" Brexit. Meanwhile, on the economic front, China's inflation report released earlier today showed consumer prices rising at a rate of 2.1%, which was slower than forecasts of 2.2% and down from 2.3% increase recorded the month before. China's Producer prices, however, continued to maintain the gains, rising 5.5% up from the 3.3% increase seen previously.
XAUUSD intra-daily analysis
XAUUSD (1185.26): Gold prices have managed to maintain steady gains since mid-December last year. Prices are now trading close to the $1200 psychological resistance level that could stall the current pace of gains with the daily Stochastics indicating that the current bullish momentum could be fading. The support at 1150.00 remains a key level to the downside with any pullback likely to find support at this level in the short term. On the 4-hour chart, price action could see a short-term pullback with the bearish divergence that has been formed with any correction likely to see a correction towards the price zone of 1160 - 1161. The daily chart's price action shows the inside bar range that was established last Thursday and could see gold prices trading within 1185 and 1163 levels in the near term.
AUDUSD intra-day analysis
AUDUSD (0.7368): The Australian dollar has been posting steady gains ever since price fell briefly below the 0.7225 handle, which marked the 127.2% measured level from the bearish flag pattern on the daily chart. The reversal since then has sent AUDUSD back to the bearish flag's support level at 0.7340 which was breached earlier today. On the 4-hour chart, the bearish divergence near the resistance at 0.7381 is indicative of a potential move to the downside with the support level at 0.7245 likely to stall prices in the near term. The current uptrend is also seen with a strong rising wedge pattern that has been formed, which signals a downside break towards 0.7245.
USDCAD intra-day analysis
USDCAD (1.3219): USDCAD has been posting steady declines, giving up most of the gains made from the FOMC's rate hike in December. Following the rally to 1.3586, USDCAD formed a bearish flag pattern which was validated by a strong break down in prices eventually falling below the minimum measured objective of 1.3298. Price action has remained choppy at the current levels, but a further decline to 1.3165 will mark the retest of the breakout from the median line in December. Establishing support at 1.3165 could potentially see USDCAD attempt to push higher in the near term, as 1.3255 resistance is likely to be tested. A breakout above this level could see the dollar extend gains towards 1.3379.