Following a rather slow start to the week, various political and monetary policy events scheduled for today will be shaping the outcome. In the US, former FBI Chief, Comey is expected to testify to Congress. The markets did not react much when a copy of the speech Comey is due to give was released; the implications could be wide and far-reaching. In Europe, the UK’s general elections are underway. The British pound is likely to see some volatility. The snap elections were called by the incumbent Prime Minister Theresa May in hopes of consolidating her position. However, with various polls showing a narrowing lead between the Labour party and the Conservative party, the possibility of a hung parliament or a victory by the Tories albeit with smaller margin is real.
The ECB’s monetary policy meeting is also scheduled for today. The euro has rallied in expectations of a hawkish ECB meeting. Yesterday, the EURUSD saw some volatility as rumors suggested about the potential changes to the GDP and inflation. The scope for the euro bulls to be disappointed is quite likely with the markets running ahead with expectations ahead of today’s meeting.
EURUSD intraday analysis
EURUSD (1.1252): The EURUSD continues to maintain its range within last Friday’s high and low. Price action has practically stalled near 1.1275. With price action staying firmly within Friday’s high and low of 1.2844 and 1.1204, this range could be breached today into the ECB meeting. For the moment, the bullish flag pattern on the daily chart remains intact with the bias to the upside. But considering that price did not post much gains to the upside, the momentum could be exhausting. Below 1.1245, price action could see a test towards 1.1200. However, a decline below 1.1200 will shift the bias to the downside.
GBPUSD intraday analysis
GBPUSD (1.2953): The British pound posted some gains yesterday, but on the daily chart, the momentum looks to be slowing down. GBPUSD could remain range bound below 1.3000 and 1.2800. A breakout from this level will signal further continuation in the near term. A clear majority for the Tories will no doubt keep the British pound supported to the upside. However, in the event of a break down in price below the 1.2800 support, we can expect to see some strong downside, towards 1.2600 with the possibility to extend the declines to 1.2400 as well.
USDJPY intraday analysis
USDJPY (109.93): The USDJPY managed to post a reversal near the support zone seen at 109.50 – 109.25. Closing on a bullish note at the support zone, the reversal comes after the previous day’s strong declines. Price action has lifted firmly off this support level. However, further upside is required to confirm this view. For the moment, the bias remains to the upside on a close above 109.50. This bias validates the upside momentum towards 110.79 where resistance can be developed. The USDJPY could be determined by the developments lined up during the day with further clarity coming out only later.
