Intraday Technical Analysis 6 September

It was a busy day for the markets on Thursday. The U.S. dollar gave up the gains from the previous day leading to the Euro and the pound sterling posting activity on the day. The British pound was volatile after initial reports from Bloomberg showed that Germany was willing to make concessions for the UK under the Brexit deal.

However, reports later indicated that Germany did not change its stance. However, the sterling managed to maintain the gains. Services PMI from the UK showed a better than expected print as activity measured by the index rose to 54.3 in August.

The Bank of Canada held its monetary policy meeting. As widely expected, the central bank left interest rates unchanged in the backdrop of U.S. and Canada NAFTA negotiations. The BoC, however, reiterated that rate hikes would be required to prevent the economy from overheating.

The economic calendar for the day will see the release of the quarterly GDP report from Switzerland. GDP growth is forecast to rise 0.5% during the second quarter. Data from the Eurozone is quiet today with the focus shifting to the U.S. ADP payrolls report.

The median estimates point to a 195k forecast for private payrolls which is slightly lower than the 219k jobs seen the month before. The ISM’s non-manufacturing PMI report is expected to rise to 56.8 marking a slight increase from 55.7.

Other data includes the factory orders report and Canada’s building permits.

EURUSD intraday analysis

EURUSD (1.1632): The euro currency gained as the U.S. dollar took a breather. Economic data on Wednesday showed that the eurozone composite PMI increased in August. However, businesses were concerned about the economic outlook due to the trade wars. The Euro fell to the session lows of 1.1542 before rebounding off the support level. The currency pair tested 1.1656 region marking a retest of the minor rising trend line’s break out level. A reversal from this level would signal a decline back to 1.1540. This would, in turn, validate the head and shoulders pattern suggesting further declines to 1.1418.

GBPUSD intraday analysis

GBPUSD (1.2908): The cable posted moderately strong gains on Wednesday as price action rallied to spike higher to fill Friday’s close at 1.2959. Price action pulled back. Fundamentals were supportive of the jump with the news about Brexit talks and the services PMI. In the near term, we expect to see a firmer retest around 1.2959 region before the cable is expected to give up the gains. Strong support formed at 1.2808 which could be tested. We continue to watch for the head and shoulders pattern to evolve. A break down below 1.2808 could send the cable down to 1.2685 as the minimum measured downside target.

XAUUSD intraday analysis

XAUUSD (1198.10): Gold prices extended modest gains on Wednesday but gave up the gains rather quickly. Price action was seen reversing around 1197.50 where resistance is seen to have been established. The downside is likely to send gold prices lower to 1180.25 level which marks a retest of the support level which previously served as resistance. Establishing support at this level could potentially prepare gold prices for a longer term corrective move to the upside.