INTRADAY TECHNICAL ANALYSIS 29 SEPTEMBER (observation as of 05:55 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.17082 and 1.17224.

-        Support line of 1.16620 and 1.16478.

Commentary/ Reason:

  1. The euro steadied on Wednesday, traded at $1.6842 after falling to a one-month low overnight and was close to testing major support around its 2021 low of $1.16640.

  2. Soaring T-note yields strengthened the dollar’s interest rate differentials after the 10-year T-note yield jumped to a 3-1/4 month high of 1.565%.  Also, a slump in stocks on Tuesday spurred liquidity demand for the dollar.  

  3. Dovish ECB comments on Tuesday also weighed on the euro. The ECB President Lagarde said the Eurozone still needs accommodative policy to exit the pandemic, and the ECB must not overreact to transitory supply shocks. Also, ECB Governing Council member Villeroy de Galhau said there is "no doubt" that inflation will be below 2% in 2023 and this "justifies keeping accommodative monetary policy."

  4. The EUR/USD is now testing the immediate target at the 2021 low at 1.166 support level though so far, no break has materialised. Smaller-bodied candles into the move suggest that bearish momentum is beginning to weaken, and a bullish rebound may, once again, be on the cards.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93130 and 0.93328.

-        Support line of 0.92491 and 0.92294.

Commentary/ Reason:

  1. The Swiss franc open easier against the U.S. dollar today, traded at 0.92917.

  2. The greenback gained strength, as surging U.S. bond yields continued acting as a tailwind for the USD and remained supportive, which kept the safe haven currency trading in a narrow range.

  3. The supporting factor, to some extent, was offset by the risk-off impulse in the markets, which underpinned the safe-haven Swiss franc and capped gains for the pair. Investors remain worried about China Evergrande Group's unsolved debt crisis. This, along with intensifying energy crisis took its toll on the risk sentiment.

  4. The USD/CHF pair, so far, has struggled to move back above the 0.93 mark, making it prudent to wait for some follow-through buying before positioning for any further gains. The next relevant hurdle is pegged near the 0.933 region, or multi-month tops touched last week, which should act as a pivotal point for short-term traders.

  5. On the downside, breaking 0.9249 might press on the price to test 0.9229, a support line from early September.

USDCHF

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.37150 and 1.37910.

-        Support line of 1.34690 and 1.33930.

Commentary/ Reason:

  1. Sterling took a beating overnight as concern over the economic impact of a shortage of gas and a scramble for fuel pulled the pair 1.23% lower, its largest daily fall in more than a year.

  2. The pound however, recovered slightly on Wednesday, rose 0.13% to trade at $1.35513, after UK PM Boris Johnson has instructed the army to prepare for delivering gasoline to petrol stations as a shortage of lorry drivers already caused dry ups in several places.

  3. The pound’s further gains, however, is put in check as the soaring T-note yields kept supportive for the dollar.

  4. Some support awaits at the 1.3460, followed by 1.339. While the first upside level to watch is 1.371, which capped cable early last week. It is followed by 1.379 resistance line.

GBPUSD