Daily Forex Market Preview, 2/11/2017

The US dollar continued to trade firm against its peers amid a busy Wednesday. Data showed that the US ISM manufacturing PMI declined to 58.7 in October which was slightly below estimates. The ADP private payrolls firm showed that the US economy added 235k jobs in the private sector. The numbers for September were revised down to 110k.

The FOMC meeting yesterday was a non-event as the central bank maintained the short-term interest rates steady. The Fed signaled that it would continue hike rates gradually.

Looking ahead investors turn to the UK as the Bank of England holds its monetary policy meeting. The central bank is expected to hike interest rates by 25 basis points although it is most likely to retain a dovish bias. The BoE Governor Carney is also scheduled to speak later after the release of the monetary policy statement.

EURUSD intraday analysis

EURUSD (1.1653): Price action in the EURUSD was rather muted following last Thursday’s sharp declines. With the euro clearing the support level at 1.1700 – 1.1672, we now expect the declines to continues. The daily chart shows the validation of the head and shoulders pattern as we expect EURUSD to decline towards the minimum target level of 1.1440. The muted price action currently is also showing signs of a temporary consolidation following which we can expect to see strong declines being resumed. There is a short-term potential for the EURUSD to briefly retest the 1.1672 – 1.1674 level where resistance could be established. However, watch the bearish flag pattern that indicates potential downside.

EURGBP intraday analysis

EURGBP (0.8777): The EURGBP fell to a 5-month low yesterday, but price action managed to recover by the end of the day. The decline below 0.8750 signals a retest of the familiar support level and indicates a short-term bounce to the upside. On the 4-hour chart, EURGBP will need to rise above 0.8778 in order for the price to test the next resistance level at 0.8857 – 0.8867 level. We expect the currency pair to maintain this short-term range in the near term. Further gains can be expected only on a breakout to the upside above this resistance level. To the downside, in the event of a bearish close below the support level of 0.8750, the currency pair could resume the bearish trend.

USDJPY intraday analysis

USDJPY (113.92): The USDJPY was seen closing on a bullish note for the second consecutive day. Price action was pushed back to the resistance level of 114.00 price level. The longer-term consolidation remains in play, and we expect to see a potential correction in the near term. However, watch for a breakout above the 114.00 level which could indicate further gains in the currency pair. To the downside, price action is supported near the short-term price level of 112.80. On the 4-hour chart, we expect to see a potential inverse head and shoulders continuation pattern taking shape. Near-term declines could be limited to 113.51. A successful reversal at this level could indicate a move to the upside, above 114.25.