By Orbex
Daily Forex Market Preview, 31/05/2018
The U.S. dollar was seen easing back from its strong patch of gains on Wednesday. The softer USD was attributed to the revised GDP estimates for the first quarter. Data showed that the U.S. economy expanded at a slightly slower pace of 2.2% in the first three months of the year.
This was slightly weaker than the 2.3% increase that was estimated previously. The ADP’s private payrolls data released on the day showed that private sector hiring added 178k jobs during the month of May. Previous month’s data was also revised down to 163k.
The data was seen to be slightly negative for the U.S. dollar as a result.
Looking ahead, the economic calendar for the day will see the release of the first quarter GDP numbers from Switzerland. Economists forecast a softer pace of growth of 0.5% during the period. Following the rebound in German inflation figures released yesterday, the Eurozone flash inflation estimates point to a 1.6% increase in headline CPI marking a strong acceleration from 1.2% previously. Core CPI is expected to rise 1.0% after registering 0.7% increase the month before.
Free Reports:
Later in the day, Canada will be releasing the monthly GDP numbers. The median estimates point to a 0.2% increase in GDP following a 0.4% increase the month before.
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EURUSD intra-day analysis
EURUSD (1.1657): The EURUSD currency pair managed to close on a bullish note for the first time in three consecutive days. The rebound in prices came following slightly weaker fundamentals for the USD and an extremely oversold market in the euro. Price action was seen testing the lows of 1.1540 before reversing the gains. The strong bullish price action could potentially signal a short term turnaround. On the 4-hour chart, the Stochastics is currently printing a hidden bearish divergence. This suggests some near-term decline in price. As long as 1.1540 low is not breached, we expect the EURUSD to potentially form a bottom near the current levels. Resistance is seen at 1.1730.
USDJPY intra-day analysis
USDJPY (108.68): The USDJPY currency pair was seen consolidating near the recently breached support level of 108.90. The rebound in price back to this level indicates that resistance is being established. In the near term, we could expect to see a downside follow through in prices as long as the resistance level of 108.90 is not breached. A break down below the recent lows of 108.48 could signal further declines in store with the potential bearish flag pattern being validated.
XAUUSD intra-day analysis
XAUUSD (1301.94): Gold prices continue to remain consolidating near the resistance of 1304 – 1301 since late last week. This strong consolidation could trigger an upside breakout above the resistance level. A close above 1304 could potentially pave the way for gold prices to post a correction to the next main resistance level at 1325. To the downside, price action looks to be forming a bottom. However, we can expect declines back to the 1282 level where a firm retest of support is still pending.