INTRADAY TECHNICAL ANALYSIS 19 MAY (observation as of 05:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.22535 and 1.22849.
- Support line of 1.21521 and 1.21207.
Commentary/ Reason:
The euro reaching for its 3-month high of $1.22425 and now last traded at $1.22319.
The euro strengthened as a faster pace of vaccine inoculations in the Eurozone has boosted confidence in the Eurozone recovery. (Germany and Spain expecting to inoculate 75% of their adult populations within the next 3 months.)
The dollar dwindled as Treasury yields stalled amid renewed expectations that the U.S. will not hike interest rates anytime soon.
The Fed will release minutes from its most recent meeting later today, which may give indications about where monetary policy is headed this year. Fed policymakers have said this is a temporary spike and reiterated that they expect interest rates to remain low, which has taken some steam out of the dollar, but not all are convinced by the Fed’s persuasion.
The EUR/USD has broken a key resistance level at the 1.217 price line which indicates strong bullish conviction. The question is whether the bullish move will continue. Momentum indicators show the pair testing overbought conditions.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90374 and 0.90676.
- Support line of 0.89389 and 0.89096.
Commentary/ Reason:
The Swiss franc traded slightly higher against the U.S. dollar in early trade today as the latter's performance was pulled by lower-than-expected building permits, inflation worries and a weaker dollar index.
The dollar slipped 0.05% against the Swiss franc, to trade at 0.89724.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.42306 and 1.42597.
- Support line of 1.41367 and 1.41077.
Commentary/ Reason:
The British pound bought $1.41883, as it reached a high last seen in late February, continuing fourth day of consecutive gains.
The gradual lifting of coronavirus restrictions in Britain have lifted the country’ currencies, though any suggestion of benign inflation could help the greenback recoup some of its losses.
The Fed will release minutes from its most recent meeting later today, which may give indications about where monetary policy is headed this year.
The GBP/USD pair has broken the 1.413 resistance level, which is significant, considering the pair has rejected this price line on several previous occasions.
However, bullish momentum remains weak. Overall sentiment is bullish in the longer-term yet the break is unlikely to build any real ground on the established rally. A pullback may be imminent. Momentum indicators suggest that the pair is overbought.
