INTRADAY TECHNICAL ANALYSIS 27 SEPTEMBER (observation as of 06:35 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.17297 and 1.17390.

-        Support line of 1.17111 and 1.17018.

Commentary/ Reason:

  1. The euro was steady at $1.17205 as investors pondered the implications of a German government led by the centre-left Social Democrats after a narrow victory in Sunday's election.

  2. Preliminary results on Monday showed Germany’s Social Democrats taking a win in the race to succeed Angela Merkel, who is preparing to leave office after 16 years in power, though it was not yet clear if they could actually form a coalition.

  3. EUR/USD’s fall from 1.190 continues last week but lost momentum ahead of 1.170 low. Initial bias remains neutral this week. On the downside, sustained break of 1.1711 support will resume the fall to 1.170 key support next. On the upside, however, above 1.1729 minor resistance will turn bias back to the upside for 1.173.

  4. Given the longer-term trajectory, a bearish break has a higher probability, especially as the picture from a fundamentals perspective has worsened.

  5. The euro was pressed towards its major support levels, on dollar strength and a hawkish Fed, with the Fed expected to taper QE, far sooner than its developed market peers are expected to move.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92874 and 0.93107.

-        Support line of 0.92120 and 0.91887.

Commentary/ Reason:

  1. The dollar mover higher against the Swiss franc on Monday, rose 0.30% to 0.92694 franc.

  2. The dollar was supported on the hawkish Fed, with the Fed expected to taper QE well before the ECB.

  3. The buying pressure in the greenback keeps USD/CHF on the higher side. Investors digested the FOMC announcement of a reduction in its $120 billion monthly bond purchase this year during its two-day policy meeting. In addition to that, the U.S. Fed Chair Jerome Powell hinted that tapering could occur as soon as in November or end in mid-2022.

  4. Following that, 0.9287 and 0.9310 may entertain the pair buyers before challenging them with a monthly high of 0.9332.

  5. Alternatively, pullback moves may aim to retest the support line from early September, near 0.9212, a break of which will direct the USD/CHF sellers towards a 0.9188.

USDCHF

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.37303 and 1.37640.

-        Support line of 1.36210 and 1.35873.

Commentary/ Reason:

  1. Sterling was last trading at $1.36630, little changed on Monday.

  2. Two central banks meetings last week indicated that the BoE and the U.S. Fed are moving to curtail and then end their extraordinary bond purchases. These programs have kept sovereign and commercial interest rates near historic lows since last March.

  3. The GBP/USD pair has seen the return of sellers after an attempted rally failed to return price action even to the mid-line of the current trading range.

  4. The pair keeps trading near its September low. A test of 1.3621 is on the cards, while a break below the level should lead to a steeper decline. Alternatively, the pound bulls need to find a strong foothold toward 1.373, in order to initiate a next recovery towards 1.3764.

GBPUSD