Daily Forex Market Preview, 03/07/2017
The markets opened to a fresh trading month today with the US dollar likely attempting to consolidate some of the losses posted in the past couple of weeks. A number of high impact economic releases will no doubt keep the volatility alive in the markets. A busy day, the markets will be focusing on the manufacturing PMI numbers out of the Eurozone.
In the US the Institute of Supply Management (ISM) manufacturing PMI will kick off the week with expectations showing a modest increase from 54.9 previously to 55.0 last month. The UK manufacturing PMI data will also be closely watched especially after last week’s hawkish rhetoric from central bankers.
EURUSD intraday analysis
EURUSD (1.1412): EURUSD rallied above 1.1400 on Friday, but price action was a bit bearish. We could expect to see some recovery to this momentum taking place with the previous high at 1.1297 likely coming in as support. However, there are minor support levels seen at 1.1357 and 1.1300 region. The pullback in EURUSD could into the high impact events such as the FOMC meeting minutes to name a few. In the near term, EURUSD could be seen consolidating above 1.1400 which will keep the bias to the upside. If price action breaks down below 1.1400, we can expect to see the declines push through towards 1.1300 - 1.1297 where support will most likely be tested. The risks of further downside could increase in the event of a breakdown below 1.1300 where we can expect EURUSD potentially falling towards 1.1129.
GBPUSD intraday analysis
GBPUSD (1.2996): GBPUSD rallied to close above 1.2975 technical level on Friday. Price action briefly tested the highs of 1.3000 as a result. Expect to see a pullback in prices in the near term if GBPUSD closes back below the 1.2975 level. In this case, expect the declines to see GBPUSD post a correction towards 1.2800 support level. A retest of this support will continue to see the bullish bias being maintained in the GBPUSD. However, if 1.2800 price level fails, then we can expect a decline in GBPUSD which will likely target 1.2688 support level to the downside. For the moment, on the 4-hour chart, we can see that there looks to be a near-term double top that was formed. Thus, watch for a break of the support at 1.2975 for the short-term decline to 1.2800.
USDJPY intraday analysis
USDJPY (111.88): USDJPY is looking to extend the gains from Friday after successfully closing above 112.00 price handle. This could see further near-term gains being extended towards 113.36 which will mark the completion of the bullish flag pattern. So far, support has been formed at 111.70 region which has been tested. Price action will be required to break above the previous high of 112.81 following which the gains to 113.36 can be expected. Only in the unlikely event of a breakdown of support near 111.72 can we expect the downside bias to exist.