Daily Forex Market Preview, 18/07/2018
The U.S. dollar was seen posting strong gains on Tuesday. The rebound came amid the U.S. industrial production rising 0.6% on the month. The Fed Chair Powell started his two-day testimony to the U.S. Congress. In his testimony, the Fed Chair maintained the hawkish rhetoric that the central bank should continue tightening monetary policy.
Elsewhere, the UK’s monthly jobs data showed that the unemployment rate remained at 4.2% while the average earnings increased 2.5% matching estimates but slower than a revised 2.6% from the previous three months.
The UK’s Office for National Statistics will be releasing the inflation report today. Economists forecast that consumer prices accelerated at a pace of 2.6% annually in June. This marks a slight increase from 2.4% seen the month before.
Core inflation rate is expected to rise 2.1%, the same pace as the month before. Data from the Eurozone will see the final inflation figures. Headline consumer prices are expected to rise 2.0% while core inflation rate is tipped to rise at a pace of 1.0%.
The Fed Chair Jerome Powell is expected to continue with his second day of testimony to congress.
EURUSD intra-day analysis
EURUSD (1.1654): The EURUSD currency pair was seen stalling near the resistance level of 1.1730 and turned lower on the day on Tuesday. Price action was seen giving up the gains made from Monday and the daily chart’s bearish engulfing pattern is likely to suggest some downside. On the 4-hour chart, the declines could push the EURUSD currency pair lower toward 1.1600 level where support could be formed. However, with the Stochastics on the 4-hour chart turning to the oversold level, we could expect to see a reversal in the currency pair.
USDJPY intra-day analysis
USDJPY (112.93): The USDJPY currency pair was seen rebounding off the support level at 112.28 and rallied to fresh highs on Wednesday. Price action however remains doubtful near the current top with the Stochastics on the 4-hour chart posting a lower high. Another leg in the decline is expected. The sharp gains in the currency pair could see a minor correction back to 112.28. In the event that this level fails to hold the declines, we could expect to see steeper correction toward 111.13.
XAUUSD intra-day analysis
XAUUSD (1228.01): Gold prices were seen falling to a fresh 12-month low on Tuesday. Price action is currently consolidating after slipping to lows of 1226.14. Further declines could push the price of the precious metal down to 1219 level which is another major support level that could be tested. To the upside, any gains are likely to be limited to the 1242 handle.