The Bank of England meeting, industrial and manufacturing production numbers and fresh inflation forecasts from the central bank are no doubt going to keep the British pound busy today. With prices hovering around the 1.2900 handle and nearly two days of doji candlesticks near the top end of the rally, the markets will be looking to the Bank of England for clues on monetary policy.
Yesterday, traders turned their attention to the Reserve Bank of New Zealand which kept the overnight cash rate steady, but the central bank delivered a ‘dovish surprise’ dismissing the recent uptick in inflation. This sent the kiwi dollar falling sharply as the markets were caught off guard by the dovish tone from the central bank.
Besides the BoE meeting and the events from the UK today, the U.S. producer price index data and the weekly unemployment claims numbers will be coming out.
EURUSD intraday analysis
EURUSD (1.0871): The pace of declines in the EURUSD slowed yesterday as the price fell to 1.0863 – 1.0854 region which saw a lot of consolidation take place a few weeks back in late April. We could, therefore, expect to see this price level hold out once again which could result in some upside momentum in the EURUSD.
Upside targets at 1.0900 – 1.09250 are some of the levels where we can expect to see the current reversal stall. On the 4-hour chart, there is a doji candlestick that was formed near the support zone of 1.0863 – 1.0854 which validates this view as the Stochastics are looking to push higher from the oversold levels currently. The bearish bias changes in the event that EURUSD breaks out higher above 1.0950.
GBPUSD intraday analysis
GBPUSD (1.2940): The British pound closed another day near the highs with the candlestick pattern forming a pin bar at the top. The nearest price level of 1.3000 cannot be ruled out as GBPUSD could be seen testing this level.
However, the overall bias remains to the downside with 1.2800 and 1.2600 as the possible downside targets. On the 4-hour chart, the rising wedge was re-drawn to adjust to the new price action, which continues to point to the downside, unless this pattern is invalidated. To the downside, the near term support at 1.2900 will be critical, and a break down below this level signals a continuation towards 1.2600 eventually.
USDJPY intraday analysis
USDJPY (114.25): The Japanese yen continues to weaken with USDJPY now into four consecutive days of gains with prices lifting off the 112.50 handle. To the upside, 115.00 remains the next likely target but the note that the daily Stochastics is very overbought which could signal the risk of a pullback in price unless the bullish momentum is maintained.
On the 4-hour chart, the nearest support is seen at 112.87 which could be tested if price fails to holds above the 113.78 handle. A decline to 112.87 will mark a correction in USDJPY ahead of further gains towards 115.00. While the U.S. economic data is soft today, the PPI numbers could trigger some movement in USDJPY.