The US house plan passed the much anticipated tax reforms plans on Thursday. The tax reforms are expected to see corporate tax being cut to 20% from the current 35% including other tweaks in an attempt to make businesses more competitive and attractive in the United States. The bill was passed with 227 votes in favor and 205 votes against.
The tax reforms bill did not garner much attention in the currency markets. On the economic front data, yesterday showed that the Eurozone final CPI was confirmed at 1.4% while core CPI was seen at 0.9%, unchanged from the flash estimates.
Looking ahead, the data today includes a speech by ECB President Mario Draghi. The economic calendar is quiet with the exception of Canada's inflation data due later in the day.
EUR/USD Intraday Analysis
EUR/USD (1.1807): After retreating from the 1.1800 handle, the EUR/USD posted a decline yesterday. However, price action soon reversed the losses in early Asian trading session rallying back to the 1.1800 level. The retracement saw EUR/USD briefly attempting to test the resistance level of 1.1843 - 1.1822. With the resistance level holding out, we expect the EUR/USD to remain range bound supported above 1.1710 - 1.1688 region. However, with the falling trend line being breached, we expect that an upside breakout in prices.
USD/JPY Intraday Analysis
USD/JPY (112.54): The USD/JPY continued to extend the declines in early trading session today. This comes amid a brief period of consolidation near the 113.00 support level. It is likely that in the near term, USD/JPY could be seen retracing back to 113.00 where resistance could be established. Support to the downside is seen at 112.00 level. On the daily chart, USD/JPY is seen breaking out from the rising wedge pattern. The downside target is seen at 110.50 region which could see further declines in store.
XAU/USD Intraday Analysis
XAU/USD (1282.90): Gold prices continued to trade flat within the 1285 and 1274 levels. Price action is showing a steady ascending triangle pattern that is being formed. This puts the upside breakout that could push gold prices towards 1295 level. Resistance is seen at 1300 which could be tested upon a successful upside breakout. Alternately, in the event that gold prices slip below 1274, the ascending triangle could be invalidated pushing gold prices lower towards 1262 handle.