INTRADAY TECHNICAL ANALYSIS 3 NOVEMBER (observation as of 05:55 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.16542 and 1.16918.
- Support line of 1.15326 and 1.14950.
Commentary/ Reason:
Moves in currency markets were muted on Wednesday. The euro traded at $1.15839, kept within sight of its opening ahead of the Fed's meeting later in the day.
Traders readjusting their positions to the tapering prospects. The Fed is expected to announce the tapering of its $120 billion-a-month asset purchase programme in its policy statement at 1800 GMT. Traders also focused on clues around what that means for timing of rate rises, after a month of seismic moves in the bond market in anticipation of hikes as soon as next year.
So far, the dollar had been held back by rising expectations of even faster hiking elsewhere in the world, but risks lie ahead if traders start to think that more than a few rate rises will be needed to tame fast-rising prices.
The EUR/USD price action is beginning to narrow as the pair looks set to oscillate ahead of the FOMC meeting. Neither buyers nor sellers are dominating currently.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.91499 and 0.91714.
- Support line of 0.90805 and 0.90590.
Commentary/ Reason:
The dollar was down 0.08% against the Swiss franc and last traded at 0.91383 on Wednesday.
The Swiss franc gains momentum on its safe-haven appeal. The risk-off impulse in the market today benefitted the safe-haven Swiss franc. The Swiss franc also moved moderately higher on short-covering ahead of Wednesday’s expected announcement from the FOMC that it will begin tapering its bond purchases.
The USD/CHF has recovered from the most recent sell-off, parted from the 0.908 support line which has acted as a strong support level for the pair. Price action has now re-entered a consolidation channel and may now move in a horizontal pattern.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.340 and 114.598.
- Support line of 113.506 and 113.248.
Commentary/ Reason:
The dollar kept within sight of its recent highs against the yen, bought 113.862 yen, against a 2021 peak of 114.692.
The USD/JPY on Wednesday fell slightly as the yen strengthened on short-covering ahead of the results of Wednesday’s 2-day FOMC meeting. Investors looked for the Federal Reserve to begin unwinding pandemic-era policy support faster than central banks in Europe and Japan.
Japanese policymakers on Tuesday reaffirmed the Bank of Japan's commitment to its 2% inflation target in a meeting held between the central bank chief and the country's economy and finance ministers.
Japanese markets are shut for a public holiday on Wednesday.
The USD/JPY pair will be contained within the current tight trading range in the near-term as selling pressure rises each time the pair attempts a break.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.36692 and 1.36940.
- Support line of 1.35888 and 1.35640.
Commentary/ Reason:
Sterling sat just above a two-week low at $1.36281, roughly in the bottom half of range it has traded since July.
The pound traded 0.13% higher against the U.S. dollar on Wednesday, ahead of Bank of England meeting announcement on Thursday and FOMC meeting later today.
Economic data points in the U.S. have been favourable amid rising inflationary pressures. Should the Fed turn more hawkish, it may boost the value of the greenback.
Meanwhile, the BoE heads this week into its most unpredictable interest rate decision in years, leaving investors and analysts on edge about the chance of its first hike since the pandemic struck the world economy.
The pound also watched as Britain and France clashed again in a post-Brexit trade fishing right.
The GBP/USD pair has pulled back above the support line which also represents the lower bound of the trading range. Selling pressure has risen in the last trading session and if bearish momentum continues a break is likely to be expected.
