Daily Forex Market Preview, 20/01/2017
Investors await Trump's inauguration and speech due later today as he takes office as the 45th President of the United States. The U.S. dollar was seen giving up some of the gains yesterday with some volatility coming off the EURUSD on the back of the ECB meeting. Earlier today, economic data saw China's GDP figures coming out slightly better than expected at 6.8%. The economic calendar later in the day includes Canada's inflation and retail sales figures while in the European session, UK's retail sales figures will be released.
EURUSD daily analysis
EURUSD (1.0683): EURUSD fell briefly below 1.0600 yesterday but managed to bounce back higher to close on a bullish note. Price action remains poised to the upside as EURUSD will test the resistance level of 1.0765 - 1.0800 in the near term. Failure to breakout above this resistance will see EURUSD slide back towards 1.0550 - 1.0500 support level, which will keep the single currency range bound for a certain period with further continuation coming on a breakout from either of these two levels. The daily Stochastics is also overbought currently and points to a hidden bearish divergence that signals a potential correction to the downside. On the 4-hour chart, EURUSD tested the bullish flag breakout, and the pattern remains valid with further upside towards 1.0738.
NZDUSD intra-day analysis
NZDUSD (0.7201): NZDUSD is seen testing the previous highs near 0.72160 following the retracement from the initial leg of the bullish flag breakout. Price action remains within reach of the 0.7232 resistance level of the bullish flag pattern but watch for a potential decline back to 0.7145 - 0.7134 support level which could be tested as broadening wedge pattern emerges. The bullish flag's objective towards 0.7232 remains intact, but in the case of a reversal, NZDUSD could be looking at falling ot 0.7135 support and potentially extending the declines down to 0.7080.
XAUUSD intra-day analysis
XAUUSD (1207.50): Gold prices closed with a doji pattern yesterday bouncing off the 1200.00 support level indicating indecision at the current levels. The bias remains to the downside, however, the support level needs to be broken in order to confirm this view. In the near term, gold remains range bound within the price levels of 1217 and 1200 with further continuation coming on a breakout from these levels. On the 4-hour chart, the Stochastics has posted a correction to below 20 with the oscillator indicating rising momentum. However, look for a reversal here to confirm the downside move below 1200, as gold prices will slide to the support level of 1181.50.