INTRADAY TECHNICAL ANALYSIS 4 OCTOBER (observation as of 07:00 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.16116 and 1.16302.

-        Support line of 1.15513 and 1.15326.

Commentary/ Reason:

  1. The euro bounced back to $1.16996, rose marginally, although still not far from last week’s trough at $1.15625.

  2. Capping the euro gains is the expectation of the Federal Reserve to begin tapering its massive stimulus in November and raising U.S. interest rates sooner than previously expected in 2022.

  3. Although, a lower T-note yields today weakened the dollar’s interest rate differentials and weighed on the dollar.

  4. The EUR/USD has stalled just below the 1.160 support line, as sellers appear to have lost steam, yet buyers currently lack the appetite to drive a reversal.

  5. A sustained move over 1.1611 will indicate the presence of buyers. If this move can generate enough upside momentum, the rally could extend into the pivot at 1.163 and higher.

  6. And on the bearish scenario, a sustained move to a retest of 1.1563 will signal the presence of sellers.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93121 and 0.93301.

-        Support line of 0.92761 and 0.92581.

Commentary/ Reason:

  1. The dollar traded slightly lower against the Swiss franc, at 0.93005 on Monday.

  2. Renewed China’s Evergrande fears, inflation concerns, US-China political tension favours safe-haven Swiss franc.

  3. The Swiss franc gains on the renewed contagion risk of Chinese debt-ridden Evergrande's default risk. The property giant missed its interest payment in the last month. In addition to that, China flew nearly 100 military planes into Taiwan airspace, the move that could upset the U.S. political space.

  4. After testing the high above 0.9560 last week, the pair failed to preserve the momentum and record a fall of more than 70-pips in three sessions. On the downside, the pair to trade negatively and head towards potential test to 0.9276 areas, making the bearish bias suggested in the upcoming sessions.

  5. Swing highs will add credence to the constructive outlook for the USD/CHF pair. A subsequent strength beyond the 0.931 intermediate hurdle, towards reclaiming further upward remains a distinct possibility.

  6. As for now, traders are bracing for Swiss Retails Sales, Inflation Rate, and U.S. Factory Orders to gauge the market sentiment.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 111.779 and 112.121.

-        Support line of 111.573 and 110.200.

Commentary/ Reason:                                        

  1. The U.S. currency dipped to 110.981 yen, staying below Thursday's 1½-year high of 112.075 yen.

  2. The safe haven yen were supported as shares in embattled developer China Evergrande were halted in Hong Kong without any immediate reason, rekindling market nerves about the possibility of global contagion.

  3. A rally in stocks meanwhile also reducing the liquidity demand for the dollar. While a lower T-note yields on Monday weakened the dollar’s interest rate differentials weighing on the dollar.

  4. The USD/JPY pair has almost fully reversed the most recent rally as all gains made by the pair have been undone by sellers. Price action is heading back towards the 110.57 support line and may now return to the previous trading range between 109.02 and 110.66 price levels.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.36912 and 1.37665.

-        Support line of 1.34475 and 1.33722.

Commentary/ Reason:

  1. Sterling rose a fraction, added 0.08% to trade at $1.35518.

  2. Despite the positive trading today, sterling is still nursing losses from a sharp drawdown last week when traders shrugged off hawkish central bank rhetoric to focus on a sour outlook and the risk of both higher rates and inflation.

  3. The renewed Brexit concerns, fuel supply issues and a broad rebound in the U.S. dollar are weighing negatively on the cable, as investors digest the latest China Evergrande story.

  4. The GBP/USD selling pressure remains and with the 1.369 price line in sight, buyers’ conviction will be tested. Alternatively, on the reversal side the immediate support appears at Friday’s low of around 1.3447, and next could open the doors toward 1.337.

  5. Light trading conditions seem to have added to the retreat in the major while a lack of relevant UK and US economic news will leave the pound traders at the mercy of the risk sentiment. 

GBPUSD