The U.S. dollar was in for another down day as economic data continued to look soft. The pending home sales showed a decline of 1.3% on a month over month basis. The Fed's Beige book report although had some encouraging data on the jobs front. According to the release, there was a modest expansion in the manufacturing sector and the overall activity since early April. This could suggest an upside surprise to today’s ISM manufacturing PMI.
With the markets looking to a new trading month, fresh economic reports will be in focus.
Economic data yesterday included the flash inflation report from the eurozone. The data confirmed the view that inflation eased back in May, after rising the month before. Data was weaker than expected with inflation rising just 1.4%, and core inflation rising 0.9%.
In the U.S., private payrolls data will be coming out today. Median estimates point to 181k jobs expected. This is slightly higher from previous month's report of 177k. The ISM manufacturing PMI will also be released later today with the forecasts pointing to another month of a soft print in the leading index.
EUR/USD intraday analysis
EUR/USD (1.1245):On the daily chart, EUR/USD is currently looking to breakout from the bullish flag pattern. Price is currently testing the higher closer at 1.1236 from May 22, and a successful bullish close above this level could trigger further upside.
The minimum upside is expected to see EUR/USD push to 1.1338 and 1.1467, marking the 127.2% and 161.8% targets of the bullish flag pattern. However, on the 4-hour chart, the mini-pitchfork shows that price could be at risk of a pullback. Support is seen at 1.1200. The bullish flag pattern remains intact up to 1.1160. Only a break down below this level will trigger further downside in price.
GBP/USD intraday analysis
GBP/USD (1.2868):The British pound is likely to post a head and shoulders pattern on the daily chart, but this pattern is still evolving. Support has been firmly established at 1.2800, while the current bounce could see price likely to reverse around 1.12950 region.
A reversal here is to be expected followed by a test back to 1.2800. A break down below 1.2800 could trigger the head and shoulders pattern which puts the minimum downside target to 1.2600. On the 4-hour chart, the upside bounce could see price test the minor support that was broken at 1.2937 where resistance could develop. Failure to reverse near 1.2950 - 1.2937 will see 1.3000 being tested once again and will invalidate the head and shoulders pattern.
USD/JPY intraday analysis
USD/JPY (110.95):The U.S. dollar fell back to 110.79 support against the yen. Price action is seen currently attempting to push higher. The symmetrical triangle on the 4-hour chart suggests that the upside could continue.
Watch for the breakout from the minor falling trend line to suggest the upside move. A successful breakout will keep USD/JPY supported to the upside with the target of 112.50 likely coming into focus. However, there are also some risks to the downside. Failure to hold the consolidation at 110.79 support will mean a possible break down lower. This will put USD/JPY on the path to test the lower support at 110.00.