INTRADAY TECHNICAL ANALYSIS 22 OCTOBER (observation as of 05:30 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.16730 and 1.16953.

-        Support line of 1.16008 and 1.15785.

Commentary/ Reason:

  1. The euro was at $1.16263, little changed on the day but headed for a 0.22% weekly gains.

  2. The euro was moderately higher but losing steam as the longer-dated U.S. Treasury yields retain control of financial markets, rose on expectations of growth and inflation.

  3. Divergent central bank policies also weighed on pair, with the Fed expected to taper QE well before the ECB. The ECB has said the recent inflation surge will be transitory and has clearly indicated no policy tightening until it averages around its 2% target, financial markets are pricing in a hike later next year.

  4. The EUR/USD pair has failed to test the 1.167 resistance line any significant way, therefore the price line remains an obstacle to future rallies.

  5. The U.S. and Eurozone PMI index are awaited later today for next short-term trading clues.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92099 and 0.92260.

-        Support line of 0.91577 and 0.91416.

Commentary/ Reason:

  1. The dollar moved lower against the Swiss franc on Friday, traded at 0.91794.

  2. The dollar drifted into the negative territory for the third successive day, and on track to 0.48% weekly slump.

  3. The risk-off impulse in the markets benefited the safe-haven Swiss franc, which, in turn, was seen as a key factor that prompted fresh selling around the USD/CHF pair on the recent days.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 114.776 and 115.056.

-        Support line of 113.870 and 113.590.

Commentary/ Reason:                                        

  1. The Japanese yen wobbled within sight of its multi-year lows, traded at 114.022 per dollar on Friday, but headed for the first weekly rise after several weeks of decline.

  2. The Japanese yen gained as investors sought safety, although gains capped on caution ahead of the nation’s general election.

  3. The Bank of Japan meanwhile reportedly is discussing phasing out a COVID-19 loan programme if infections in the country continue to dwindle, potentially setting the bank up to exit a key crisis-mode policy sooner than investors expect.

  4. The USD/JPY pair is beginning to descend away from the 114.77 price ceiling. Sellers appear to lack the conviction to drive the trend change as buying pressure is still present in price action. Momentum indicators are undergoing reversals with RSI pulling back to the 70 zone.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.38488 and 1.38873.

-        Support line of 1.37239 and 1.36853.

Commentary/ Reason:

  1. The British pound stood at $1.37997, off a month peak hit on Wednesday, still headed for a third consecutive weekly rise against the dollar.

  2. Moderation of Fed hike expectations, along with rising acceptance that the BoE will hike rates before the end of this year act as a tailwind for the GBP/USD pair. Global supply chain issue, Brexit, and rocketing gas prices have added to Britain's recent inflationary tilt.

  3. On Sunday, BoE Governor Andrew Bailey said the BoE would have to act if it saw a surge in inflation expectations in the medium term.

GBPUSD