INTRADAY TECHNICAL ANALYSIS 4 JUNE (observation as of 05:30 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.22140 and 1.22515.
- Support line of 1.20926 and 1.20551.
Commentary/ Reason:
The euro slipped 0.11% to a 3-week low of $1.21129 per dollar on Friday.
The dollar has regained some of the losses since the end of April, tracking the uptick in Treasury yields.
Stronger T-note yields are a supportive factor for the dollar as the 10-year T-note yield on Thursday rose +3.5 bp to 1.623%, while holding the position on Friday.
Meanwhile, a negative comment made late Wednesday from ECB President Lagarde weighed on the euro when she said, “the ECB will keep favorable financing throughout the pandemic crisis.”
A positive factor for EUR/USD was Thursday’s data that showed the Eurozone May Markit composite PMI was revised upward to 57.1 from the previously reported 56.9, the fastest pace of expansion since the data series began in 2018.
The EUR/USD has broken the ascending trendline and earlier support level as strong bearish sentiment has reversed the rally. The pair expected to now return to a period of consolidation within the chart trading range.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90688 and 0.90989.
- Support line of 0.89711 and 0.89409.
Commentary/ Reason:
The dollar rose higher against the Swiss franc on Friday, added 0.12% to trade at 0.90451, not far from yesterday’s 1-week high of 0.90517.
The pair was boosted as traders keeping an optimistic view on the jobs data due later in the day for the next inflation trajectory.
The yield differentials also seem to be moving in the dollar’s favour and that policymakers’ tone is subtly shifting.
The dollar also was positioned to be more advantageous and supported as investors returned to safe-haven currencies due to cautious sentiment on the global market.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.42406 and 1.42497.
- Support line of 1.40587 and 1.40137.
Commentary/ Reason:
Sterling traded slightly lower at $1.40935 on Friday after dropping through its 20-day moving average as the dollar climbed.
Stronger T-note yields are a supportive factor for the dollar as the 10-year T-note yield on Thursday rose 3.5 points to 1.623%, on top of hawkish comments by St. Louis Fed President Bullard and Dallas Fed President Kaplan regarding the labour market, that was also supportive of the dollar.
The pandemic situation in the U.S. also has improved after the 7-day average of new infections fell to a new 14-month low of 16,703 on Wednesday.
Meanwhile, the UK was supported as it recently gets green light to start talks on joining Trans-Pacific Partnership (CPTPP). The decision marks another step in Britain's efforts to pivot away from Europe, build global influence and form new trading links with faster growing economies following its exit from the EU at the end of 2020.
