Daily Forex Market Preview, 23/01/2017
The U.S. dollar continued to extend the declines for what could a third consecutive day. On Friday, Donald Trump took office as the 45th President of the United States. In his inaugural speech, Trump highlighted the "America First" theme which translated to protectionist policies that could be pursued. The U.S. dollar was seen trading weak across the board, only next to the Turkish lira. The Japanese yen is seen making sturdy gains as of this morning, already up 0.83% and is the strongest currency so far.
EURUSD intra-day analysis
EURUSD (1.0743): EURUSD is looking to keep up the pressure as price approaches 1.0765 - 1.0800 resistance level. We continue to keep an eye on a pullback from this resistance level, with the potential for the single currency to test 1.0600 - 1.0551 support level, which would mark the right shoulder of the evolving inverse head and shoulders pattern. In the mean time, the current rally near 1.0750 marks the completion of the bullish flag pattern. We could, therefore, now expect to see a reversal coming through over the next few days. The correction towards 1.0600 - 1.0551 could, however, be invalidated in the event EURUSD makes a clean break above 1.0800.
GBPUSD intra-day analysis
GBPUSD (1.2444): The 4-hour chart for GBPUSD shows a bullish possibility for the price to continue higher following the break of the neckline resistance at 1.2400. The inverse head and shoulders pattern that we see was marked by price previously falling to 1.2000 lows. A successful breakout and a bullish continuation above 1.2400 will put GBPUSD to the upside for a minimum price objective towards 1.2800 at the very least. The bullish bias will be invalidated however if GBPUSD falls below 1.2280, where the right shoulder was formed. The main event risk for GBPUSD will, however, come from tomorrow's Supreme Court ruling.
EURGBP daily analysis
EURGBP (0.8630): EURGBP has remained flat over the past few days after the week before price action fell sharply on the Brexit press conference from Theresa May. Short-term support looks to have formed near 0.86240 where the price has continued to bounce off for the most part of last week. EURGBP is attempting to break out from below this support level once again, and it is likely that the downside breakout could possibly come from tomorrow's Supreme Court ruling in the UK on putting Brexit to a parliamentary vote. This could be bullish for the British pound pushing EURGBP lower towards the support level seen at 0.8330.