INTRADAY TECHNICAL ANALYSIS 16 NOVEMBER (observation as of 05:20 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.14624 and 1.15041.

-        Support line of 1.13277 and 1.12861.

Commentary/ Reason:

  1. The euro traded at $1.13796, steadied on Tuesday after crumbled below $1.135 for the first time since July last year amid concerns about COVID-19 outbreaks and as Europe's central bank chief pushed back against the need to act to tame inflation.

  2. Europe is once again "at the epicentre" of the COVID-19 pandemic, WHO warned, as cases soar across the continent. Germany on Monday reported a record 7-day incidence rate of Covid infections of 303 cases per 100,000 inhabitants. Worsening pandemic in Germany would lead to pandemic restrictions curbing economic activity and growth.

  3. Also driving currency markets are investors' assessment of the different responses to rising inflation from global central banks. ECB President Christine Lagarde on Monday, pushed back on market bets for tighter monetary policy saying doing so now to rein in inflation could choke off the eurozone's recovery.

  4. Persistent supply chain bottlenecks and soaring energy costs are slowing eurozone growth and will keep inflation high for even longer than had been thought, ECB President Christine Lagarde said, adding “If we were to take any tightening measures now, it could cause far more harm than it would do any good," a contrast with hawkish hints from elsewhere.

  5. The EUR/USD has begun a moderate recovery in the early Asian trading session after several sessions of bearish dominance. Price action stalled at the 1.132 support line and will now head back towards the 1.146 resistance line. Momentum indicators are recovering from oversold conditions.

  6. Traders now awaited U.S. retail sales data. Should U.S. retail sales data turn out to be better than expected, the dollar could stay elevated as it bolsters the case for an earlier rate hike by the Fed.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92781 and 0.93075.

-        Support line of 0.91828 and 0.91533.

Commentary/ Reason:

  1. The dollar rose to a one-week high against the Swiss franc early on today, before pared gains to stand at 0.92426, down 0.10%.

  2. The greenback gained momentum ahead of the U.S.' October retail sales data which is expected to rise 0.7% month-on-month, based on consensus estimates.

  3. Also helping the dollar is recent data showing a strong U.S. economy that also cast doubts on the Fed's view that price pressures will be transitory, fuelling speculation that interest rates will be lifted sooner than previously thought.

  4. On the other hand, the Swiss franc hold on to its safe-haven appeal. The rising COVID-19 cases in Europe benefitted the safe-haven Swiss franc.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 114.371 and 114.748.

-        Support line of 113.617 and 113.240.

Commentary/ Reason:                                        

  1. The dollar was flat against the yen, last bought 114.159 yen.

  2. Talks between U.S. President Joe Biden and his Chinese counterpart Xi Jinping during the Asia session are also likely to set the tone in financial markets, and currency moves were slightly ahead of any outcome from the discussion.

  3. The yen meanwhile was under pressure, on speculation that a weak Japanese economic growth will prompt the BoJ and the government to boost stimulus measures.  Japan Q3 GDP fall weaker than expectations, while BoJ Governor Kuroda on Monday said that there’s a need for persistent, powerful monetary easing since Japan has no immediate prospect of reaching the BoJ’s inflation target.

  4. USD/JPY buyers have begun to lose steam once again, as price action begins to head towards the 114.37 price level. A period of consolidation appears to be forming within this tighter trading range and there appears to be little conviction from buyers or sellers to drive price action.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.34610 and 1.35370.

-        Support line of 1.33090 and 1.32330.

Commentary/ Reason:

  1. Sterling sat at $1.34278, rose 0.13% on Tuesday.

  2. GBP/USD is testing the resistance level at 1.346. RSI has recently moved away from the oversold territory, and there is plenty of room to gain upside momentum in case the right catalysts emerge.

  3. Britain will publish its September labour market report later on Tuesday, for indication for a rate hike this year, while U.S. retail sales, trade prices and industrial production for October are also due, giving another hint about the health of the economy.

  4. The British pound however, remains pressured after Britain and the European Union still looked far from finding a post-Brexit agreement over Northern Ireland.

GBPUSD