INTRADAY TECHNICAL ANALYSIS 19 AUGUST (observation as of 05:40 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.17631 and 1.18138.

-        Support line of 1.16617 and 1.16110.

Commentary/ Reason:

1. The dollar rose to a 9-month high versus the euro on Thursday, with Federal Reserve policy makers mostly in agreement that a stimulus taper would start this year.

2. The euro fell to $1.16770 against the dollar.

3. The dollar also strengthened as investors have cut exposure to riskier currencies, mostly on virus concerns. A slide in stocks meanwhile also lend support as it boosted liquidity demand for the dollar.

4. The EUR/USD has broken a price low at the 1.170 support level in a significant bearish move. Conviction from sellers has been strong since the rejection of the descending trendline and could signal a longer-term bearish trend if the break is sustained.

5. The downside risk will open the way for the euro to move lower to 1.166, followed by 1.161. Momentum indicators are bearish with RSI approaching oversold conditions.

6. Focus now shifts to the Fed's annual research conference in Jackson Hole, Wyoming, next week for any read about the central bank's next steps. Many analysts expect the Fed to announce its plan to taper asset purchases as early as the Sept. 21-22 policy meeting.

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92111 and 0.92399.

-        Support line of 0.91176 and 0.90887.

Commentary/ Reason:

1. The dollar moves further off its 1-week low recorded Tuesday, to trade higher for the third day, rose 0.30% at 0.91950 franc on Thursday.

2. The dollar remains on the front foot, following the release of the FOMC policy meeting overnight and as Switzerland recorded its biggest jump in infections in months.

3. In minutes of their July 27-28 meeting released overnight, Fed officials saw the potential to ease bond-buying stimulus later this year if the economy continues to improve as expected, although the condition of “substantial further progress” toward maximum employment had not yet been met.

4. A reduction in debt purchases is typically positive for the dollar as it means the Fed will not be flooding the financial system with cash.

5. Intraday bias in USD/CHF remains neutral at this point. The next target is the 0.921 and 0.923 resistance lines which has also previously contained price action and will therefore serve as a test of bullish conviction. Momentum indicators remain in bullish territory.

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.38087 and 1.38647.

-        Support line of 1.36967 and 1.36407.

Commentary/ Reason:

1. The GBP/USD drops as the U.S. dollar dominates the market after FOMC minutes. The British pound held at $1.37215 as risk-averse mood knocked the currency.

2. Due to the rapid spread of the delta variant and the impact on the global economy, investors began flocking to safe-haven assets.

3. The pound struggle also added as the British inflation fell to 2.0% YoY in July, below the market’s expectation of 2.3%. A weaker reading temporarily reduced expectations of a rise in interest rates by the BoE.

4. The focus for Fed watchers now is the annual Jackson Hole, Wyoming symposium, which runs Aug. 26-28.

5. The GBPUSD pair is extending the sell-off further into the current range between the 1.364-1.386 price levels. Whether price action will reach the lower bound of the range will be determined by the conviction of sellers. Momentum indicators have turned bearish, with MACD breaking the zero line.