Daily Forex Market Preview, 06/02/2017
The U.S. dollar settled lower on Friday after the January payrolls report showed a slow pace of growth in the average earnings while November and December payrolls were revised lower. The data overshadowed an otherwise solid headline print. U.S. equities rallied however as the Dow Jones reclaimed the 20k mark, but the gains came on talks of easing the Dodd-Frank Act which saw the financial stocks driving gains on Friday. The economic calendar today is slow with most of the data coming out of Europe which includes Germany's factory orders (exp. 0.6%), Eurozone retail PMI and Sentix Investor Confidence (exp. 16.7).
AUDUSD (0.7663): The Australian dollar is seen trading weaker this morning after a soft patch of economic data. Retail sales for the month of December showed a sharp decline, falling 0.1% against estimates of a 0.3% increase. The Australian dollar closed last week on a bullish note coming after a doji candlestick the week before. This could potentially indicate further upside to come ahead of a minor dip to 0.7600. On the 4-hour chart, price action looks to have formed a double top pattern with the Stochastics indicating a bearish divergence. Watch for AUDUSD to break down below 0.7642 for a correction towards 0.7600.
EURUSD (1.0775): EURUSD closed Friday's session on a bullish note attempting to reclaim the 1.0765 - 1.0800 resistance zone. However, the failure to post significant gains above 1.0800 is a sign of caution with EURUSD seen consolidating around this level. On the 4hour chart, the bearish divergence is continuing to build up, but support at 1.0700 - 1.0735 will be the initial level that is likely to challenge the declines to the downside. A breakdown below 1.0700 is essential for further declines towards 1.0600.
GBPUSD (1.2485): GBPUSD has been retreating for two consecutive days so far after price reached 1.2666 last week, reaching the top end of the rally which marks the minimum upside objective for the bullish flag pattern on the 4-hour chart. The current declines could be seen stalling near 1.2400 which marks the daily session's inverse head and shoulders resistance level which could now turn to support. A bounce off this level will like trigger a fresh rally in GBPUSD.