Robust Industrial Production Renews Support For The USD

The US dollar was seen trading stronger on Tuesday as data showed that industrial production rose 0.3% on the month. This came after the previous month’s data was revised to show a 0.7% decline. Import prices also increased, rising 0.7% on the month marking the largest increase since June 2016. Besides the economic data, the markets were also seen reacting to potential rumors that President Trump might nominate John Taylor, an economist from Stanford as the next chair of the Federal Reserve.

In the UK, inflation data showed a 3.0% increase for the month of September. The data sent the British pound pushing lower on the day. In the Eurozone, inflation data confirmed that the headline CPI rose 1.5% and core CPI was up 1.1% in September.

Looking ahead, the ECB President Draghi is expected to speak earlier in the day today. The UK’s monthly jobs report data will be coming out which will bring some additional risk to the GBP. In the US trading session, the monthly building permits and housing starts will be released.

EUR/USD Intraday Analysis

EUR/USD 4 Hour Chart

EUR/USD (1.1770):The EUR/USD extended the declines yesterday on a strong US dollar. However, the declines now see price retesting the breakout level of the descending wedge pattern. This could suggest some near term gains on the horizon. The Stochastics is also oversold and could signal a near term bounce. Any gains in price will be limited to the resistance level which has been established at 1.1822. Support is seen at 1.1720. The EUR/USD is expected to maintain trading within the range into next week’s ECB meeting. However if support at 1.1720 breaks, then EUR/USD could post further declines towards 1.1704 – 1.1672 where the major neckline support exists.

AUD/USD Intraday Analysis

AUD/USD 4 Hour Chart

AUD/USD (0.7854):The Australian dollar has been attempting to recover some of the losses from a previous couple of weeks. Price action is seen initially slipping earlier this week before currently attempting to push to the upside. The breakout from the falling median line suggests a near term rally towards the price level of 0.7957. This price level previously served as support and is now likely to be tested for resistance. However, ahead of the gains, AUD/USD could be seen sliding towards the lower support at 0.7799. Establishing support here will validate the upside move towards 0.7957.

XAU/USD Intraday Analysis

XAU/USD 4 Hour Chart

XAU/USD (1287.16):Gold prices fell sharply yesterday with little to no retracement. However, the doji candlestick formed on the 4-hour chart and the subsequent bullish close could suggest some upside. Further declines, if any could send gold prices down to the lower support established at 175 – 1274 level. At the initial test of support, gold prices could see a short term bounce. To the upside, any gains are limited to the resistance level and potentially the breakout level from the rising wedge pattern.

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