INTRADAY TECHNICAL ANALYSIS 3 MARCH (observation as of 07:10 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.12404 and 1.12958.
- Support line of 1.10610 and 1.10056.
Commentary/ Reason:
The euro was pinned at $1.10967, not far from a 22-month low of $1.10576 overnight trough. The pair is down 1.4% for the week so far and is heading for a fourth consecutive weekly loss against the U.S. dollar.
The euro remains under pressure on concern the war in Ukraine will be a drag on European economic growth, exacerbating supply-chain issues and pushing energy prices higher, which in turn, will further fuel already high inflation.
The pair however pared some of its losses on short-covering ahead of Russia-Ukraine talks will reportedly still take place soon.
The market’s attention is also focused on Powell’s testimony. Powell noted that a rate hike in March would be appropriate, adding that the risk of inflationary pressures depended on a number of factors.
The EURUSD sell-off appears to have stalled. The stall may not mean a reversal is on the cards yet, however, further downside does appear limited. Momentum indicators have also decelerated the downward trajectories and RSI is testing oversold conditions.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92163 and 0.92398.
- Support line of 0.91403 and 0.91168.
Commentary/ Reason:
The dollar slipped on Thursday, to trade at 0.91972 franc.
Havens such Swiss franc remains supported, though it dipped overnight with strength from the dollar and riskier currencies.
The major has been consolidating in the last few trading sessions amid obscurity over the interest rate decision and stance by the Fed towards ultra-hot inflation and Ukraine crisis.
The risk-off impulse has rebounded on a slight hawkish stance in Powell’s testimony and risk-sensitive assets are underpinned.
Intraday bias in USD/CHF remains neutral and outlook is unchanged. More sideway trading could be seen. Break of 0.9216 will next target 0.9239 resistance. On the downside, break of 0.9140 will bring deeper fall back to 0.9116 support.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 115.731 and 116.060.
- Support line of 114.667 and 114.338.
Commentary/ Reason:
The Japanese yen traded at 115.686 per dollar, having weakened yesterday from below 115.2 against the greenback.
USD/JPY on Thursday rallied moderately as strength in stocks weakened the safe-haven demand for the yen. While the rebound in the T-note yields were bearish for the yen.
The yen is also weighed Japan's trade position is set to worsen given it is a major importer of energy and resources.
The pair was put in a mixed performance as traders try to decide if the escalation of the war between Russia and Ukraine and the imposition of harsh sanctions on Russia by Western countries will drive risk-on or risk-off sentiment.
USD/JPY price action is close to break the 115.73 resistance line. Bullish conviction drove the break in yesterday’s session, and it remains to be seen whether it can be sustained. Momentum indicators are bullish.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.34420 and 1.34943.
- Support line of 1.32727 and 1.32203.
Commentary/ Reason:
Sterling managed a bounce from Wednesday's 1-month low of $1.32711 to trade at $1.34154, buoyed by buying interest and supported by firmer oil prices
The British pound has been tugged lower with the euro since Russia's invasion. The dollar maintained its strength as investors sought shelter in safe-haven currencies as the outcome of the conflict between Russia and the Ukraine remains unprecedented.
Currency traders are trying to assess how the escalation of tensions and its economic impact might alter the Bank of England’s rate hike path in the near term, with money markets currently pricing in a 25-basis point rate increase from the BoE in March.
The GBP/USD pair continues its contest at the current price line, as neither buyers nor sellers appear to have enough support to drive price action given the uncertainty in fundamentals. The GBP/USD pair couldn’t manage to hold at the 1.3272 support line, to trade with clear positivity and attack 1.34420 resistance, which makes us prefer to stay aside until we get clearer signal for the next trend through breaching one of the mentioned levels.
Breaching the mentioned resistance will push the price to achieve additional gains and head towards 1.3450 as next positive targets, while breaking the support will put the price under the negative pressure again, to head towards 1.3220.