INTRADAY TECHNICAL ANALYSIS AUGUST 24 (observation as of 06:40 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.00462 and 1.00921.
- Support line of 0.98975 and 0.98515.
Commentary/ Reason:
The euro made a brief trip above parity on Tuesday, before back under pressure at $0.99525 on Wednesday - barely above a 20-year low of $0.99007 recorded overnight.
Disappointing U.S. economic data released overnight knocked the greenback momentarily, though not particularly hard as growth concerns are deeper in Europe.
The euro was struggling as markets see soaring energy prices setting off another round of inflationary pressure that will take a bite off growth.
Europe was braced for fresh disruption in energy supplies from Russia. While the S&P flash composite PMI of business activity in Europe was not as bad as feared, analysts said grimmer news for the economy is likely given how gas prices have surged to record highs ahead of winter. Benchmark gas prices in the EU surged 13% overnight to a record peak, having doubled in just a month to be 14 times higher than the average of the past decade.
The EUR/USD pair resumes its negative trading, reinforcing the expectations of continuing the bearish trend for the rest of the day, to the next targets at 0.9897 and extend to 0.9851, while the continuation of the bearish wave requires holding below 1.0046.
Investors now await the ECB monetary policy meeting accounts on Thursday to sound hawkish, after in July the ECB surprised markets and hiked interest rates by 50-bps as inflation in the bloc continues to break record levels.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.96741 and 0.97064.
- Support line of 0.95696 and 0.95372.
Commentary/ Reason:
The dollar eased a little against the Swiss franc after a consecutive seven-days uptrend exhausted.
Remain high, the dollar was traded to 0.96591 franc, as it rose 0.30% on Wednesday.
The Swiss franc extended its weakness against the U.S. dollar, amid a lack of fresh catalysts.
Investors have sought shelter in dollars is the growing risk of a hawkish message from the Federal Reserve's Jackson Hole symposium, flagged by several officials last week.
Favouring the USD/CHF buyers also following bounce in the U.S. Treasury yields.
Dollar kept rising against the Swiss franc in an ascending channel, with continued support from the Stochastic index, potentially heading for 0.9674, then 0.9706, provided the pair holds above 0.9569.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 137.918 and 138.643.
- Support line of 135.572 and 134.847.
Commentary/ Reason:
The yen gave back some overnight gains to hover around 136.706 per dollar.
The safe haven appeal was strong for the currency, as stock markets remain in sell-off mode.
The USD/JPY also plunges from its 1-month highs around 137.705 as U.S. recession fears were fuelled by softer U.S. economic data. Nevertheless, traders took advantage of an overpriced U.S. dollar and sent the major down.
Government bond yields, on the other hand, broke higher. The yield on the 10-year Treasury note peaked at 3.040%, a five-week high.
The interest rate differential in the U.S. meanwhile remains favouring the greenback over the yen. The Fed is in the middle of a rate-hiking cycle while the BoJ maintains QE and record-low interest rates and shows no inclination toward tightening monetary policy. The Fed’s talk towards the end of the week is awaited.
The USD/JPY is trading near the strong resistance of 137.918, while touching the 20-day SMA, with profit-taking pushing the pair to the support of 135.572, then 134.847, provided it holds below 137.918.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.18400 and 1.18763.
- Support line of 1.17226 and 1.16863.
Commentary/ Reason:
The pound is at $1.18086 after hitting a 2-1/2 year low of $1.17174 on Tuesday.
The pair plummeting amid risk-off flows. Demand for the dollar resumed after Friday’s corrective decline and ahead of the Jackson Hole Symposium, where central bankers from around the globe will meet to discuss economic issues.
Sterling found some support overnight after Britain's composite PMI number managed to stay in growth territory, though it hasn't really pierced investors' gloom over British or Europe's outlook.
The dollar also remains as favourite as dollar bulls tracked the rebound in the U.S. Treasury yields across the curve in the day.
Sterling declined below the resistance of 1.1840, losing half the gains it gathered yesterday, with technical indices still pressuring the pound. Expect a deeper decline to the support of 1.1722, and then 1.1686, provided the pair remains below 1.1840.