Gold looks to FOMC as $1200/ounce price level to be tested
Daily Forex Market Preview, 01/02/2017
Busy day for the markets with the start of a new trading month! Needless to say, the economic calendar is packed with fresh monthly data. While PMI's dominate most of Europe, the U.S. trading session will focus on the private payrolls data from ADP, followed by the ISM's manufacturing PMI which is forecast to rise to 55, potentially logging the fourth month of increase. Later this evening, the two-day FOMC meeting concludes with a release of the monetary policy statement. CME Group's Fed funds tool is assigning a less than 5% change for a rate hike at today's meeting.
EURUSD intra-day analysis
EURUSD (1.0789): EURUSD posted a strong rally yesterday with price seen reclaiming the 1.0765 resistance level. A confirmed bullish close today could keep the upside bias intact as EURUSD could be seen testing 1.0900 with the potential to maintain further gains. On the 4-hour chart time frame, 1.0800 is now seen clearly as the resistance level. Adjusting the pitchfork, we can see the support levels at 1.0700 and 1.0600, which remain the support levels to the downside in case of a correction. To the upside, look for support to be formed at 1.0800 to ascertain further upside momentum.
USDJPY intra-day analysis
USDJPY (113.23): USDJPY closed bearish yesterday, but price found support at the familiar price zone of 112.60 - 113.00. This was the price level that has managed to support prices in the previous two attempts where a double bottom pattern was formed. On the 4-hour chart, USDJPY is currently consolidating into a descending triangle pattern. The support level at 112.60 - 113.00 remains critical as a break down below this level could signal further downside towards 111.00 at the very least. The Stochastics on the 4-hour chart is currently near the oversold levels and could signal a short-term bounce higher.
XAUUSD intra-day analysis
XAUUSD (1208.55): Gold prices are likely to dip down to the $1200.00 handle in the near term with the bias turning bullish following yesterday's strong price action which saw this key price level being breached. With the FOMC decision looming and the central bank likely to stay on the sidelines, gold prices are poised to push higher as long as the support at 1200.00 holds. On the 4-hour chart, we see a hidden bearish divergence which validates the correction to the downside, seen at 1200.00. A breakdown below 1200.00 could, however, signal further downside to come but could keep gold prices range bound within 1190 and 1200.00 handle.