INTRADAY TECHNICAL ANALYSIS 20 AUGUST (observation as of 04:45 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.17061 and 1.17215.
- Support line of 1.16566 and 1.16413.
Commentary/ Reason:
The euro recovers modestly, ticked up 0.11% to $1.16870, but still traded near the 9-1/2-month low of $1.16658 reached overnight. The pair is down almost 1% this week, the most since mid-June.
Dollar strength weighed on the euro along with a decline in bund yields after the 10-year German bund yield fell to a 2-week low.
The greenback has also been boosted by expectations the Federal Reserve could still start to taper stimulus this year, even with COVID-19 infections surging this month in the U.S.
The EUR/USD pair corrects oversold conditions, expected to mitigate although the risk remains skewed to the downside. The continuation of the downtrend carries the potential to re-test the support zone, where sits the November 2020 low.
The broken 1.17 level is the first level of resistance. It is followed by 1.172, which support the pair last week.
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 0.92196 and 0.92444.
- Support line of 0.91392 and 0.91144.
Commentary/ Reason:
The dollar pulled down on Friday, slipped 0.22% to trade at 0.91392 franc. Although still on track to 0.35% gain for the week.
The Swiss currency pair snaps a 3-day uptrend. Following that, the target of 0.9070, comprising early August tops, could lure the USD/CHF sellers. However, 0.913 and the 0.911 threshold can act as buffers during the anticipated fall.
Meanwhile, an upside will needs validation of forming the rising wedge near 0.921, before witnessing successful trading beyond the monthly top of 0.924.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.37453 and 1.37927.
- Support line of 1.35920 and 1.35447.
Commentary/ Reason:
Sterling touched a fresh 1-month low of $1.36175 on Friday, before steadied around the opening at $1.36323. It has fallen 1.67% this week, which would be the biggest drop for two months.
The sterling continued to struggle against the greenback on risk-aversion.
The pound opened lower against the U.S. dollar on Friday as the safe-haven greenback advanced amidst ongoing concerns over the rising COVID-19 cases globally and better U.S. initial jobless claims data, which make a better case for the Fed officials to reduce stimulus by the end of this year.
The strengthening of the U.S. dollar also had put pressure on the oil prices, with the oil benchmark Brent crude currently trading at around $66 per barrel.
The GBP/USD pair broke 1.3680 level strongly and rallied downwards, reinforcing the chances of continuing the bearish trend, with our target at 1.3590 support level, noting that surpassing the mentioned level will push the price lower.
The expected trading range for today is between 1.354 support and 1.374 resistance.
As for now, investors turn their attention to the GBP Retail Sales data to gauge the market sentiment.