Daily Forex Market Preview, 19/01/2018

The U.S. dollar was drifting lower as the dollar index weakened due to U.S. politicians cutting it close with passing the spending bill to avoid a government shutdown. While the House passed the bill yesterday, the Senate must now approve the spending bill in order to avoid the shut down. The USD was also hit by weaker housing starts and Philly Fed manufacturing index.

Earlier in the day, China's GDP beat expectations rising 6.8% on the quarter and posting a 6.9% annualized GDP growth for the year ending 2017.

Looking ahead, the economic calendar is light. The UK's retail sales report will be coming out but is expected to show a decline of 0.8% for the month of December.

EURUSD intra-day analysis

EURUSD (1.2260): The EURUSD reversed losses yesterday as the currency pair once again turned bullish. However, the gains were limited within Wednesday's trading range. Further upside gains could be capped near the 1.2280 - 1.2290 level where resistance could likely form. A reversal at this level could signal a downside correction in the common currency. Support at 1.2090 - 1.2070 remains in view if the EURUSD manages to break past the previous lower reversal point at 1.2180. The currency pair could maintain this range going into next week's ECB meeting on Thursday.


USDJPY intra-day analysis

USDJPY (110.88): The USDJPY was seen pulling back following Wednesday's strong gains. Price action has cleared the short term resistance level of 110.70 and any declines could be limited to this level in the near term. For the moment, with support being formed at the 110.70 region, USDJPY could be looking to move sideways. Resistance is seen at 111.61 - 111.51 level and further gains can be expected only on a breakout above this level. Still, the next major resistance level at 112.04 will need to be breached.


NZDUSD intra-day analysis

NZDUSD (0.7302): The New Zealand dollar continues to trade flat around the 0.7300 handle with the currency pair failing to close any higher. This consolidation could keep the NZDUSD trading flat in the near term. This also suggests however, that the NZDUSD could be ripe for posting a correction. Support at 0.7160 remains in view to the downside as it marks a horizontal support level as well as the break out level from the falling trend line.