INTRADAY TECHNICAL ANALYSIS 19 NOVEMBER (observation as of 06:30 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.14947 and 1.14947.
- Support line of 1.12577 and 1.11787.
Commentary/ Reason:
The euro last traded at $1.13536 on Friday, 0.16% lower since opening today, headed for 0.6% weekly losses and on course for its worst month since June.
Although it has recovered after slumping to $1.12639 on Wednesday, the currency remains vulnerable as fundamentals and positioning swing to favour the dollar when the Federal Reserve surprised investors with a hawkish shift in tone. U.S. data has turned surprisingly strong just as doubts have arisen over the outlook for other major economies.
By contrast, Europe is grappling with a new wave of COVID-19 cases and fresh restrictions to curb it, while the central bank is pushing back on pressure to raise rates. Pandemic situation in Europe is deteriorating after the 7-day incidence rate of new infections in Germany rose to a record of 337 per 100,000 people on Thursday.
The EUR/USD has tried to begin to recover from the most recent sell-off. Although there are signs of selling activity in the recovery therefore a rally seems unlikely.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.93326 and 0.93639.
- Support line of 0.92312 and 0.91999.
Commentary/ Reason:
The dollar traded higher against the Swiss franc on Friday, rose 0.18% to trade at 0.92630 and on track to a 0.5% weekly gain.
Retreating U.S. Treasury bond yields on Thursday dragged the U.S. dollar away from a 16-month peak touched in on Wednesday, which, in turn, exerted some pressure on the USD/CHF pair.
However, a combination of factors helped limit any meaningful downfall, rather assisted the pair to quickly reverse the dip. Stable performance around the equity markets undermined the safe-haven Swiss franc and extended some support to the USD/CHF pair.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.992 and 115.389.
- Support line of 113.707 and 113.309.
Commentary/ Reason:
The Japanese yen weakened slightly, trading at 114.342 per dollar, and was headed for a weekly loss of about 0.30%, though it has also recovered since touching an almost five-year low of 114.967 a few days ago.
Greenback's rally paused, as sensitivity to oil prices also keeps the safe haven yen in check.
The yen remains under pressure on central bank divergence, with the Fed expected to tighten monetary policy well before the BoJ.
Japan reportedly prepared for new stimulus package of $490 billion to cushion the economic blow from the COVID-19 pandemic, bucking a global trend towards withdrawing crisis-mode stimulus measures and adding strains to its already tattered finances. The government will announce details of the package after it is signed off at a cabinet meeting later Friday.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.35220 and 1.35610.
- Support line of 1.33960 and 1.33570.
Commentary/ Reason:
The sterling traded marginally higher against the U.S. dollar on Friday despite an improvement in the U.S. labour market data.
The British pound last bought at $1.34940.
Sterling has been the stellar performer besides the dollar among G10 currencies and en route to about 0.70% weekly gain against the dollar as a surge in British inflation to a 10-year high has firmed bets on the Bank of England hiking rates in a month.
The sterling also strengthened after British Brexit Minister David Frost said on Wednesday that his government's preference is to strike a deal to improve post-Brexit trade arrangements for Northern Ireland and that the agreement can be reached by Christmas.
The GBP/USD pair is struggling to find support for a rally as highlighted by the small-bodied candles in recent trading. Bullish conviction appears low and given the recent lower highs and already established longer-term bearish trend, the current move will likely be consolidated.
