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GBP Awaits PM May's Brexit Speech

Daily Forex Market Preview, 22/09/2017

The US dollar was seen giving back the gains a day after the FOMC meeting. EURUSD managed to recover as the currency pair regained the 1.19 handle.

On the economic front, the Bank of Japan left interest rates and QE unchanged signaling that it could still maintain its easy monetary policy. This led to some weakening in the Japanese yen across the board. The ECB President Mario Draghi gave a speech yesterday but refrained from making any references to monetary policy or the euro's exchange rate.

Looking ahead an important day for the British pound as the Prime Minister, Theresa May will be giving a speech on Brexit to the UK Parliament. Investors are expecting that the UK will be moving towards a softer Brexit. However, the risks are balanced, and the GBP could be seen trading volatile today. ECB President Mario Draghi is also expected to speak later in the day.

EURUSD intraday analysis

EURUSD (1.1953): Following a sharp decline of the 1.1950 level, the EURUSD managed to recover. Price action remains firmly range bound within the 1.2058 and 1.1822 levels of resistance and support. On the daily chart, the rising wedge pattern remains in play with the current level of 1.1950 proving to be a key level for the euro. A breakout above this level could signal a continuation to the upside, in which case we can expect gains towards 1.2090. To the downside, support at 1.1822 will be an important level as a breakdown below this level could signal a move to the lower support at 1.1672.

GBPUSD intraday analysis

GBPUSD (1.3580): The British pound extended gains once again yesterday breaking past the bullish flag pattern. Price action is critically trading below the resistance level of 1.3589. A breakout above this level is needed for the GBPUSD to continue to extend the gains. However, a reversal near the resistance level could send the cable lower as the bullish flag pattern becomes invalidated. The price action in GBPUSD will most likely be determined by the PM May's speech today.

USDJPY intraday analysis

USDJPY (111. 76): Following a string of consecutive gains, USDJPY was seen easing back earlier today. This comes after the US dollar posted a two-month high yesterday. In the short term, support at 111.00 remains a key level that will be tested. This lever previously served as resistance and an unfilled gap from last Friday's close at 110.87 will most likely be filled. Further declines are unlikely unless USDJPY slips below this support level. To the upside, the next target is likely to be 113.00.