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INTRADAY TECHNICAL ANALYSIS 17 DECEMBER (observation as of 06:30 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.13747 and 1.14058.
- Support line of 1.12739 and 1.12428.
Commentary/ Reason:
The euro was last at $1.13420. The euro firmed after the European Central Bank took another small step to roll back crisis-era stimulus. It climbed to a 2-week high on Thursday.
The ECB in Frankfurt said it would cut its bond purchases under its 1.85 trillion euro PEPP next quarter and wind down the scheme by March in a long-flagged move.
It will, however, keep reinvesting PEPP profits until the end of 2024 and ramp up the longer-running but more rigid Asset Purchase Programme to limit the withdrawal effects.
The European Central Bank further cut its bond purchases overnight but vowed to continue its unprecedented monetary policy support for the euro zone economy into 2022. It left the benchmark refinancing rate unchanged at 0%, while the rate on its marginal lending facility remained at 0.25%.
The euro also supported after the 10-year German bund yield rose to a 1-week high of -0.311% on the ECB’s hike in its 2021 Eurozone GDP and inflation estimates. Better-than-expected economic data was bullish for the euro after the Eurozone Markit manufacturing PMI fell -0.4 to 58.0, stronger than expectations of 57.8.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92561 and 0.92855.
- Support line of 0.91609 and 0.91315.
Commentary/ Reason:
The greenback slipped 0.10% against the Swiss franc, down to record a new 2-week low, last traded at 0.91827 franc.
The Swiss franc meanwhile holds on to its safe-haven appeal in cautious trading as traders digested news of the Omicron variant of COVID-19.
The Swiss National Bank kept its rates locked at -0.75%.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.257 and 114.523.
- Support line of 113.370 and 113.096.
Commentary/ Reason:
The Japanese yen strengthened to 113.556 against the greenback but headed for a 0.20% weekly losses.
The Bank of Japan kept monetary policy ultra-loose on Friday but dialled back emergency pandemic-funding, less than 48 hours after the U.S. Federal Reserve signalled an imminent end to stimulus as policymakers respond to soaring global inflation.
The BOJ's decision, underpinned by cautious optimism that the economic damage wrought by coronavirus crisis is gradually healing, puts it in line with major central banks' moves to phase out crisis-mode policies.
The yen also found support on increased safe-haven demand after the U.S. imposed sanctions on China over biometric surveillance.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.33961 and 1.34477.
- Support line of 1.32292 and 1.31777.
Commentary/ Reason:
Sterling firmed to $1.33263 on Friday after climbing 0.48% overnight and now headed to end the week 0.35% higher.
The pound soared after Britain became the first G7 economy to hike interest rates since the onset of the pandemic on Thursday. The BoE surprised markets by hiking its main interest rate from a historic low of 0.1% to 0.25% amid mounting inflation pressure.
The BoE also said UK inflation was likely to peak around 6% in April. Data on Wednesday showed UK inflation surged to 5.1% in November, its highest in more than 10 years, the same day the country recorded its highest daily coronavirus cases since the start of the pandemic.
Bulls looking for a discount to target 1.339 confluence area, GBP/USD bulls bought back into the breakout at a discount. Subsequently, the price has started to move higher and is embarking on a test of the 1.3330s.