By Orbex Blog
Daily Forex Market Preview, 08/02/2018
The European Commission released its quarterly forecasts yesterday and gave an upbeat assessment to the growth in the Eurozone. Inflation and unemployment were however more subdued in comparison. The forecasts show that inflation in the Eurozone will stay below the ECB’s 2% target rate in 2019 at only 1.6%.
In the overnight trading session, the RBNZ voted to keep the overnight cash rate unchanged at 1.75%. The decision comes after a weak fourth quarter inflation data and a somewhat mixed unemployment numbers for the quarter.
Looking ahead, focus shifts to Threadneedle Street as the Bank of England will conclude its monetary policy with the statement and press conference. The BoE is expected to keep rates unchanged at today’s event. Economists are divided on whether the BoE will leave forward guidance unchanged or whether it will bring forward the rate hike expectations. The BoE is currently expected to leave rates unchanged at least until August this year.
Elsewhere, the weekly unemployment claims from the U.S. will be coming out later in the evening.
Free Reports:
EURUSD intra-day analysis
EURUSD (1.2260): The euro currency extended declines against the USD yesterday as price was seen falling to a fresh monthly low. The declines come following the doji pattern that was formed. With price closing below the doji’s low, we expect to see further continuation in declines. Support is seen at 1.2091 on the daily chart which could be the first level of support. On the 4-hour chart the declines have invalidated the bullish flag pattern. Any near-term retracements could be seen stalling near 1.2336 or up to 1.2398 level. A retest of this level could suggest further declines with the eventual target seen at 1.2090.
GBPUSD intra-day analysis
GBPUSD (1.3876): The British pound has been extending declines over the past few daily sessions. Price action closed with an inside bar yesterday but further downside is expected. Following the breakdown below the support level at 1.4037, we expect to see a retracement to this level in the short term. If price action can establish resistance at this level, we could expect to see further declines pushing the GBPUSD down to the support at 1.3617 which is pending retest. To the upside, in the event that GBPUSD breaks past 1.4037, the downside bias is invalidated.
NZDUSD intra-day analysis
NZDUSD (0.7182): The New Zealand dollar was seen weakening since the RBNZ’s decision. Price action briefly tested the breached support level at 0.7333 where resistance has been established. The reversal off this level has seen price declining with the first support level at 0.7160 within reach. Expect to see NZDUSD potentially rebounding at this level but the gains could be limited within the resistance level of 0.7333 and the current support. We expect the longer term trend to point to the downside with NZDUSD likely to see further declines that could test the lower support at 0.6950.