The US dollar gave up some of the gains on Friday as investors booked profit after the markets digested the hawkish statement from the Fed. The FOMC’s meeting last week saw the central bank raising the short term interest rates and also giving forward guidance to the markets about its intentions to unwind its massive balance sheet.
Economic data on Friday saw the building permits and housing starts numbers rising less than expected and slower than the previous month. The University of Michigan’s consumer sentiment index also dipped from a revised 97.1 to 94.5, which added to the weakness.
Looking ahead, the lack of any clear economic data today will most likely see the markets trading flat. Fed speeches include FOMC member Dudley and Evans. Across the pond, the EU and the UK are scheduled to being the Brexit negotiations today which could add some volatility to the markets.
EURUSD intraday analysis
EURUSD (1.1194): EURUSD closed bearish yesterday with price action expected to continue to decline. The technical support level at 1.1171 was breached yesterday, and this suggests further downside in price. EURUSD could be expected to continue to slip towards 1.1018 – 1.0995 support level over the medium term. On the daily chart, there is potential for a short term retracement to occur. This could see EURUSD retesting 1.1171 price level where the broken support could turn to resistance in the near term. The bias shifts to the upside only on a close above this level.
GBPUSD intraday analysis
GBPUSD (1.2772): GBPUSD is seen trading below the 1.2800 resistance level. We can expect this price level to be tested in the near term, following which if it fails to breakout above this level, the bias shifts to the downside. The target at 1.2600 remains in place for GBPUSD, which could be tested in the near term. There is also a potential for price action to extend the declines down to 1.2400. On the 4-hour chart, we see the descending triangle pattern in place. This also coincides with the head and shoulders pattern from the daily chart, suggesting the downside in GBPUSD.
USDJPY intraday analysis
USDJPY (110.97): USDJPY closed with a doji pattern on Friday and a bearish close today could signal a reversal. If this happens, the reversal would occur below the resistance level of 111.61 and could keep USDJPY range bound within this resistance and support at 108.32. On the 4-hour chart, support is seen at 110.52. If we see a reversal at this level, then USDJPY will suggest near-term upside in price. This could send price testing the resistance level at 111.70. Alternately, failure to hold the declines at 110.52 will see USDJPY decline towards 109.50.
