The U.S. dollar posted strong gains on the day, led by a hawkish statement from the Federal Reserve which maintained the view that a rate hike in June was coming. The central bank brushed aside recent weak data calling it transitory.
Earlier in the day, the U.S. ADP private payrolls shows that companies added 177k jobs during April, which was slightly higher than 175k jobs that was forecast by economists. The March payrolls numbers were revised down to 255k from 263k. The ISM non-manufacturing PMI was also stronger, rising to 57.5, beating forecasts of 56.1
The U.S. dollar index which was seen trading above the 98.50 handle managed to close bullish, rising to an 8-day high to close 99.24 by Wednesday’s close. Looking ahead, a rather slow day in the making with only the services PMI from the Eurozone and the UK scheduled for the day. Among central bank speeches, ECB’s Draghi and BoC’s Poloz are due to speak later in the day.
EUR/USD intra-day analysis
EUR/USD H4 Chart
EUR/USD (1.0894):EUR/USD is seen consolidating within the ranges from last Friday as price slipped below 1.0900 yesterday. With the U.S. nonfarm payrolls due tomorrow, price action could remain muted in the near term.
Currently, EUR/USD is seen attempting to reclaim the 1.0900 price handle. On the 4-hour chart, we notice that EUR/USD broke out from the triangle pattern. If resistance is established at 1.0900, then we can expect some downside momentum build up. A breakdown of support near 1.0863 – 1.0854 is required for EUR/USD to test the next lower support at 1.0750.
GBP/USD intra-day analysis
GBP/USD (1.2876):The British pound continued to moderate near the 1.2900 handle yesterday before breaking down lower on a stronger greenback. The British pound could not hold on to the gains despite stronger than expected construction PMI data.
With 1.2900 broken, GBP/USD could be looking to test the next support at 1.2800. However, price action could remain stuck within these levels in the near term. The UK services PMI is due later this morning and forecasts are rather tepid with expectations for a soft decline to 54.6 from 55.0 previously.
XAU/USD intra-day analysis
XAU/USD (1239.75): Gold prices broke past the 1250.00 handle yesterday with the declines seen coming on the back of the FOMC meeting. With this major support being breached, the bias remains to the downside, for another test of support near 1200.00.
On the 4hour chart, the strong bearish break down of 1250.00 indicates a possible near term consolidation, but further declines could be seen coming towards 1200.00. Thus, gold is likely to remain a sell on any short-term rebound in prices.