Daily Forex Market Preview, 06/09/2016
The markets were trading flat yesterday on account of the US and Canadian markets staying close. However, GBPUSD was the exception as another beat on estimates on the services PMI kept the sterling's bullish momentum going. This could, however, change in the near term as a pullback to 1.3200 support is likely. Gold prices continue to push higher, but prices remain caught within strong price levels, a breakout from which could set the near term bias. Watch for the US ISM non-manufacturing PMI which remains the key economic release for today.
EURUSD (1.1154): EURUSD was flat yesterday with price action staying limited and below the 1.1200 and 1.1100 price levels. On the 4-hour chart time frame, EURUSD has been consolidating near 1.1150 level that has held out as support few weeks ago. As long as this support holds, EURUSD is likely to remain poised to trade within the range mentioned with the likelihood of an upside correction. Of course, resistance at 1.1200 needs to be cleared in this aspect. The falling median line plotted on the chart so far shows a higher low being formed. A breakout from the median line is therefore essential to validate a test back to 1.1200 followed by retesting the resistance near 1.1270 - 1.1280 level. To the downside, below 1.1150, EURUSD could be seen falling to 1.1100.
USDJPY (103.52): USDJPY closed bearish yesterday following the reversal near 104.00. This could indicate a near-term decline with 102.00 being the likely support that could be tested. On the 4-hour chart, USDJPY remains to trade within 104.00 and 103.00 price level, but the bearish divergence is likely to see some downside. Watch for a break below 103.00 in which case; USDJPY could fall to 102.00 and eventually to the lower support seen near 101.00 and 100.80.
GBPUSD (1.3326): GBPUSD attempted to test 1.3400 resistance but fell shy of a few pips to close flat on the day. On the 4-hour chart, we are still expecting to see a pullback in GBPUSD towards 1.3200 - 1.3170 support level. Watch for potential lower high being formed on the 4-hour chart and near the 1.3400 resistance level which will give an early indication of a correction towards 1.3200. Above 1.3400, further upside could be seen towards 1.3500, but it is unlikely that the upward momentum will be able to sustain the rally.
XAUUSD (1327.01): Gold prices closed in a small range yesterday on account of the US holiday. Price action remains caught within 1315 and 1330 levels in the near term, and further upside to 1350 could be seen on a breakout above 1330. To the downside, below 1315, gold prices could be seen testing the 1300 support level. On the 4-hour chart, the resistance zone near 1327.50 - 133.00 remains strong with the Stochastics showing a hidden bearish divergence. The divergence points to near term correction towards 1314 - 1312 which is a minor support level. In the event of a breakout above 1331, gold prices could be seen rising towards 1350.00.