Daily Forex Market Preview, 25/10/2017
The US dollar was seen maintaining its gains across the board although price action was subdued against the euro. The Kiwi dollar was seen extending losses after the new government reported that it will review and propose reforms for overhauling the RBNZ’s mandate.
Earlier today, the inflation report from Australia showed that consumer prices rose 0.6% on the quarter ending July. This was weaker than the estimates of 0.8% but higher than the previous quarter’s 0.2% increase. The trimmed mean CPI was weaker, rising just 0.4%.
Looking ahead, the UK’s preliminary GDP data will be coming out today. Economists are forecasting a 0.3% increase in GDP on the quarter, which will put the economic expansion at the same pace as in the second quarter. Later in the day, the Bank of Canada will be holding its monetary policy meeting. No changes are expected as the central bank is expected to keep interest rates unchanged after raising rates in the previous two months.
EURUSD intraday analysis
EURUSD (1.1756): The EURUSD was seen trading flat with price action briefly rising to intraday highs. The sideways range is expected to be maintained as price action approaches the support level at 1.1710 – 1.1688. A breakdown below this support level could signal further declines in price. On the daily chart, we notice that head and shoulders pattern that has been forming and this could be validated on a test of the neckline support. In the near term, EURUSD could remain trading within the current range, but there is a risk of an upside move. Still, as long as the resistance level of 1.1822 holds, the currency pair remains biased to the downside.
USDJPY intraday analysis
USDJPY (113.94): The US dollar managed to recover against the yen as price action posted a strong reversal. This came despite price reversing just above the support level that was supposed to be tested at 113.00 level. A breakout above the previous high formed at 114.00 is required in order for USDJPY to maintain the gains. Failure to do so could signal another leg to the downside. This will potentially see USDJPY falling back to establish support at 113.00 which is required in order to validate the gains to the upside.
XAUUSD intraday analysis
XAUUSD (1273.13): Gold prices were seen giving up the gains as price action fell back to the 1275 – 1274 support level. This indicates that gold prices could see some short-term upside correction. Resistance is seen at 1296 which could be tested in the near term, but further gains can be expected only on a convincing breakout above this level. To the downside, gold prices could potentially slip below the current support level which will see a test of the lower support near the 1262 handle. However, watch out for the descending wedge pattern that price has consolidated into. This could suggest an upside breakout that targets the resistance level at 1296.00.
