INTRADAY TECHNICAL ANALYSIS 29 NOVEMBER (observation as of 06:50 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.13150 and 1.13765.
- Support line of 1.11920 and 1.11305.
Commentary/ Reason:
The euro, which jumped almost 1% on Friday as traders closed out short positions, slipped 0.23% to $1.12801 on Monday.
Traders back to safe haven currencies on fear that a new and possibly vaccine-resistant coronavirus variant could hurt the ongoing economic recovery. Concern of recent surge in COVID-19 infections in Europe that lead to additional restrictions continue to weigh on EUR/USD.
European Central Bank President Christine Lagarde put a brave face on the latest virus scare, saying the eurozone was better equipped to face the economic impact of a new wave of COVID-19 infections or the Omicron variant.
The dollar meanwhile supported as investors see the U.S. Federal Reserve tightening monetary policy faster than other major central banks.
The EUR/USD has recovered from the price floor yet has stalled at 1.131 resistance line. Bullish sentiment has been lacking in the pair since it broke the 1.153 support line last two weeks.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92768 and 0.93164.
- Support line of 0.91976 and 0.91580.
Commentary/ Reason:
The dollar pulled 0.10% higher against the Swiss franc on Monday, traded at 0.92524 franc.
It slumped 1.37% on Friday last week as the shift in expectations undermined the U.S. dollar, to the benefit of the safe haven Swiss franc.
The franc gained after the detection of a new and possibly vaccine-resistant COVID-19 variant sent investors scurrying toward the safety of the safe haven, on top of to rising coronavirus cases in Europe.
Before lost ground as markets latched onto hopes the new variant of concern would prove to be "mild"
The U.S. dollar meanwhile stays supported amid expectations for a faster tapering process and possible rate hikes by the Federal Reserve. The U.S. FOMC meeting minutes indicated that the committee members would not hesitate to address inflationary pressures, implying that the tapering process could be quickened, and a rate hike could happen sooner.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.199 and 114.765.
- Support line of 113.067 and 112.501.
Commentary/ Reason:
The safe haven Japanese yen took a breather after its sharp run upward late last week. The Japanese currency surged as much as 2% at one point on Friday to 112.992.
It traded at 113.134 per dollar on Monday, flat around the opening.
The safe haven yen was supported but now started to lost ground as markets latched onto hopes the new variant of concern would prove to be "mild"
Divergent central bank policies gave hopes to the dollar. The greenback was still supported on expectation of earlier Federal Reserve monetary policy tightening faster than other major central banks.
If the COVID-19 situation worsens, then dollar-yen could go down further, but otherwise the monetary policy divergence is definitely going to be weighing on the yen in the medium term.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.33740 and 1.34250.
- Support line of 1.32720 and 1.32210.
Commentary/ Reason:
Sterling was about flat at $1.33357, off its weakest level since December 2020 at $1.32787 touched Friday.
The currency was on edge as investors prepared to see if the Omicron coronavirus variant would really derail a nascent reopening of economies around the world and the tightening plans of some central banks.
Although markets were a bit calmer compared to the sell-off last Friday as investors waited on more data to assess the extent of its impact.
Doubts arose on whether the Bank of England will raise interest rates at its December meeting.
The U.S. and U.K have started to close borders to foreign visitors after several cases of the variant have been detected within the country.
The GBP/USD pair has stalled and traded rangebound, indicating a lack of conviction from both buyers and sellers.
