INTRADAY TECHNICAL ANALYSIS 10 DECEMBER (observation as of 06:40 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.14077 and 1.14646.
- Support line of 1.12236 and 1.11666.
Commentary/ Reason:
The euro stayed under pressure, traded at $1.12976 on Friday after dropped 0.4% overnight, and en route for a about 0.13% weekly loss.
A further rise in the U.S. Treasury bond yields, along with the cautious market mood drove some haven flows back towards the greenback. The yield on the benchmark 10-year U.S. government bond shot back above the 1.50% threshold amid firming expectations for a faster policy tightening by the Fed. Investors seem convinced that the Fed will hike interest rates sooner rather than later on worries about the persistent rise in inflationary pressures.
The euro was weighed on concern the spread of the Omicron COVID-19 variant will prompt more countries to impose travel restrictions that curb economic activity, while dollar saw some safe-haven demand on the matter.
Weakness in stocks today also boosted liquidity demand for the dollar.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92528 and 0.92761.
- Support line of 0.91777 and 0.91545.
Commentary/ Reason:
The US dollar remained stuck in a sideways lateralisation against the Swiss franc on Friday.
The franc retreated from Thursday’s gains and traded easier against the U.S. dollar amid mixed reactions over U.S. jobs data, which influencing appetite for the dollar.
The dollar rose 0.11% higher against the Swiss franc on Friday, last traded at 0.92420 franc, and heading for 0.70% weekly gains for the pair.
The pair struggles to keep the gains in the mid-week as the Swiss franc holds on to its safe-haven appeal in cautious trading as traders digested news of the impact of Omicron variant of COVID-19.
However, the dollar has resumed its run, buoyed by the resumption of market expectations of Federal Reserve rate hikes in 2022. Market expectations on monetary policy changes have been the major driver behind the recent price actions in USD/CHF.
The USD/CHF pair has found support once again as an upward trajectory form in price action. Another test of the 0.925 and 0.927 ceiling seems inevitable.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.058 and 114.316.
- Support line of 113.222 and 112.964.
Commentary/ Reason:
The pair is trading nearly flat on Friday with the price action reflecting similar movement in U.S. Treasury yields. Mixed signals regarding the Omicron COVID-19 variant may be the catalysts behind the choppy, two-sided trade.
The dollar was changing hands at 113.528 per yen.
The USD/JPY pair trades within sideways track between 113.222 support and 114.058 resistance, thus, we will continue with our neutrality until the price confirms breaching one of these levels, waiting to detect the next targets clearly.
Divergent monetary policies continued to influence the currency’s movement, as hawkish signals from the Fed contrasted with the BoJ’s firm commitment to retain easy monetary policies to achieve its 2% price stability target. BoJ deputy governor Masayoshi Amamiya on Wednesday said that there was no need for the central bank to tweak its ultra-loose policy with inflation “well below” its 2% target.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.33529 and 1.33880.
- Support line of 1.32391 and 1.32040.
Commentary/ Reason:
Sterling stayed under pressure as England has tightened restrictions to try and curb the spread of the Omicron variant. It last bought $1.32257.
UK Prime Minister Johnson on Wednesday tightened pandemic rules that urge people to work from home and mandate the use of vaccine passports in large social venues.
The dollar however, failed to extend further gains though new COVID-19 restrictions in Britain hurt the sterling. The British pound is headed for a 0.2% weekly gains.
