INTRADAY TECHNICAL ANALYSIS 17 NOVEMBER (observation as of 05:45 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 breaking down below the 1.13 level, last bought at $1.12988 and slipping around 0.20% on Wednesday, to post a new 1-1/4 year low.

  2. Dollar strength undercut the pair, along with central bank divergence with the Fed expected to tighten monetary policy well before the ECB. The greenback was helped by Tuesday data which showed U.S. retail sales rose faster-than-expected in October, potentially encouraging the U.S. Federal Reserve to accelerate the tapering of its asset purchase programme, as inflation remains stubbornly high.

  3. ECB President Christine Lagarde meanwhile 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. Eurozone Q3 GDP grew 2.2%, in line with expectations.

  4. Another bearish factor for the euro is as Europe suffered from worries about growth amid a renewed surge in COVID-19 cases.  Germany on Tuesday reported a record 7-day incidence rate of infections of 312.4 cases per 100,000 inhabitants.

  5. Germany's parliament is due to vote on Thursday on stricter measures to deal with the outbreak, while Austria imposed a lockdown on unvaccinated people at the start of the week. France, the Netherlands, and many countries in Eastern Europe are also struggling to contain infections.

  6. The EUR/USD has plunged further as bearish sentiment continues to drive price action in mid-week trading. A break of the 1.13 price floor indicates significant bearish conviction. Momentum indicators suggest that the sell-off will not last as the pair has moved beyond the 30 oversold line.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93326 and 0.93639.

-        Support line of 0.92312 and 0.91999.

Commentary/ Reason:

  1. The dollar rose to a one-month high against the Swiss franc today, to stand at 0.93171.

  2. The strength in dollar was broad after a surge in U.S. inflation boosted the bets that the Federal Reserve to hike interest rates faster than expected.

  3. On the other hand, the franc holds on to its safe-haven appeal. Investors see the currency as a safe haven investment amid market uncertainties due to rising COVID-19 cases in Europe.

  4. The USD/CHF is fast approaching a recent price ceiling at the 0.933 price level. Support has been rising into the move which may suggest that conviction is strong enough to facilitate a break. Momentum indicators are bullish with MACD breaking the zero line to the upside, though, RSI is approaching the overbought line.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 115.204 and 115.548.

-        Support line of 114.091 and 113.746.

Commentary/ Reason:                                        

  1. The greenback peaked as high as 114.967 yen, a 4-1/2-year high, before last changing hands at 114.902.

  2. The combination of higher U.S. T-bond yields, rising equity prices and a rally of the broad dollar across the board helped the pair to take up more ground.

  3. The dollar was also strong following the better-than-expected U.S. retail data that add to the momentum from last week when data showed consumer prices surging at the highest rate since 1990.

  4. USD/JPY strengthens on a positive outlook, eyes towards major resistance 115.20. Traders on Wednesday will closely monitor several US Federal speakers' speeches and Japan's National CPI on Thursday to find impetus.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.34752 and 1.35000.

-        Support line of 1.33948 and 1.33700.

Commentary/ Reason:

  1. Sterling was flat against the dollar, to trade at $1.34233 on Wednesday. As dollar was gaining broadly against other currencies, the British pound slightly outperforming it as bets are now on for BoE to hike in December.

  2. Sterling rose to a one-week high against the dollar overnight, as employment report for the UK revealed that the employment situation held steady despite the furlough scheme ending in September. As this was a key concern for BOE, and the reason they had not raised rates at their last meeting, bets are now on for them to raise rates at their next meeting in December.

  3. The GBP/USD pair is struggling to gain traction after an extended sell-off. Selling pressure remains despite price action reaching higher lows. Traders will be parsing UK consumer price data later today for further support for BOE tightening.

GBPUSD