Daily Forex Market Preview, 12/09/2017
The US dollar was seen recovering on Monday as geopolitical tensions eased pushing risk appetite higher. The US dollar index, which was seen trading below 91.85, was seen attempting to pull back higher after the index filled the gap from December 2014. The lack of economic data saw the markets taking cues from the global developments.
On the economic front, data yesterday saw Canada's housing starts rising 223k on the month, beating estimates of 216k and accelerating slightly higher from the previous month.
Looking ahead, the UK's inflation data will be main focus today. According to the estimates, consumer prices in the UK are forecast to accelerate 2.8% in August, up from 2.6% in July. Core consumer prices are also expected to rise 2.5%, slightly up from 2.4% previously. The data marks the start of a busy week for the British pound which will also include the UK parliamentary vote on Brexit as well as wage data and the BoE's meeting.
EURUSD intraday analysis
EURUSD (1.1959): The EURUSD extended declines sharply yesterday as price action fell to the minor support level at 1.1962. The common currency was seen posting a reversal off this level. The bias remains balanced at the moment although there is a strong chance that price action could be setting up for a bullish breakout. Resistance at 1.2058 remains the key level for the EURUSD. The current price action also signals a potential cup and handle pattern that could be forming in the near term. However, should prices continue to decline, the bullish bias in the EURUSD could ease as price is likely to fall to the next support level at 1.1882.
GBPUSD intraday analysis
GBPUSD (1.3178): The British pound remains bullish as price action remains flat above 1.3150 level. The currency pair gave up some of the gains yesterday. The rally to 1.3200 marks a test of the trend line break out following establishing support at 1.2847. Further gains could be seen coming as GBPUSD could potentially be testing 1.3236 resistance level. To the downside, minor support has been formed at 1.3161. Therefore, a breakdown below this support level could signal near-term declines. The correction could potentially push the cable down to the pending support level at 1.2980.
USDJPY intraday analysis
USDJPY (109.34): The USDJPY recovered sharply off the support level at 109.15 - 108.26, rising to post a 4-day high. In the near term, USDJPY could be seen falling back to retest the support level at 108.64 - 108.26. Establishing support here could shift the bias to the upside with price action likely to push towards 111.00. Alternately, to the downside in the event that the support fails, we could expect USDJPY falling back to the previous lows formed near 107.60.