The US dollar was seen trading mixed as the greenback attempted to post some gains against the euro while the antipodean currencies continued to post strong gains. The Fed Chair, Janet Yellen was seen concluding her two-day remarks to the US lawmakers. It was evident by the end that the Fed was hinting a dovish rate hike cycle.
Yesterday, the BoE policymaker, Ian McCafferty argued the case for policy tightening. He said that he favors a sooner unwinding of the QE. McCafferty is a well known hawk on the BoE’s board and was one of the members who voted for a rate hike at last month’s BoE meeting.
Looking ahead, the data today will focus on the US numbers. Inflation and retail sales figures will be coming out. Inflation is expected to remain soft while retail sales are expected to post a modest rebound following a decline of 0.3% on both the core and headline retail sales figures.
EURUSD intraday analysis
EURUSD (1.1404): The EURUSD was a bit volatile as price attempted to rally but failed after posting an intraday high at 1.1455. Currently, on the 4-hour chart, we can see EURUSD posting modest gains to retrace the breakout level from the rising wedge pattern. A reversal could signal a continuation to the downside. Support at 1.1320 will be the initial downside target for the EURUSD. Given the bullish nature of the currency pair, the bearish bias will be invalidated if we see EURUSD breaking past the resistance level at 1.1444.
GBPUSD intraday analysis
GBPUSD (1.2956): The British pound is looking at extending the gains from the previous two days. Hawkish comments from BoE policy maker has put the currency pair biased to the upside. It is likely that GBPUSD will be testing the resistance level at 1.2970 which was tested in the early parts of July. A breakout above 1.2970 is required for GBPUSD to push higher. This would make it possible for the currency pair to test 1.3000 level once again. To the downside, if resistance is formed at 1.2970, then expect the downside to continue with price staying flat within 1.2970 and 1.2894
USDJPY intraday analysis
USDJPY (113.45): USDJPY closed with some modest gains yesterday. However, the upside could be limited towards 113.71 level. Only a convincing breakout above this level will signal further continuation to the upside. Therefore, it is quite likely for USDJPY to post a reversal near this resistance level in the short term. On the 4-hour chart price action is likely to stay range bound within the levels of 114.03 and 113.39. A lower high being formed at this level could signal a possible move to the downside. Also, note the potential head and shoulders pattern that is forming at this level. The current gains could see a right shoulder being formed while the neckline support is seen at 113.05.
