US dollar looking weaker

12 May, 2017

Economic data from the US continued to remain robust with the initial jobless claims declining to 236,000 for the week ending May 6 while the producer prices rose 0.5% on the month. The markets will be looking to today's consumer price index data. The US dollar was seen rather muted as the US dollar index struggled near the 95.50 resistance level. In the UK, the Bank of England's monetary policy meeting saw no chance to interest rates and asset purchase. In the inflation forecasts, the central bank expected inflation to overshoot the central bank's target rate and remain around 2.7% this year while growth is expected to show a 0.4% increase in the second quarter. The British pound was trading weaker on the day with the BoE's meeting and the weak economic numbers released earlier that showed a contraction in manufacturing, construction, and industrial output. Looking ahead, FOMC members Harker and Evans are due to speak later today while the U.S. will be reporting the monthly CPI and retail sales numbers.

EURUSD intraday analysis

EURUSD (1.0866): EURUSD formed another doji yesterday posting a new one-month low at 1.0838. The price action indicates that the momentum is likely to be slowing and we could expect to see some upside retracement today. 1.0900 remains the key resistance level to the upside. Price action as remained steady near the support level of 1.0863 - 1.0854 and we could expect to see prices bounce off to the upside in the near term. However, resistance is likely to form at 1.0900 - 1.0950. This level also sits close to the 38.2 and 61.8% Fibonacci levels measuring the current decline. A reversal on this pullback will signal a continuation to the downside.

GBPUSD intraday analysis

GBPUSD (1.2885): The British pound slipped yesterday following a weak set of construction, manufacturing and industrial production numbers with the Bank of England's meeting offering little support for the British pound. However, the GBPUSD looks resilient, and unless we see a close below 1.2800, there is a scope of prices to remain consolidating at the current levels. Furthermore, the reversal just below 1.3000 handle without the level being tested correctly infers that there is a risk of prices pulling back higher to test this level.  For the moment, after the break down below 1.2900, GBPUSD is seen pushing back higher, and an intraday close above this level will signal that prices will consolidate within 1.2900 and 1.2965 levels.

USDJPY intraday analysis

USDJPY (113.74): The US dollar closed on a bearish note yesterday which comes after five straight days of gains. This possibly hints at a short-term correction in prices which could see a test towards 112.50 - 112.875 support level. On the 4-hour chart, price action has been consolidating near the resistance level of 114.00 - 113.78 region with the previous 4-hour session closing in a doji. A bearish close on the current 4-hour session after the doji could signal a correction towards 112.875 - 112.50 level which could be a strong support level and marks a short-term correction in prices.

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