INTRADAY TECHNICAL ANALYSIS 24 NOVEMBER (observation as of 05:40 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.13150 and 1.13765.

-        Support line of 1.11920 and 1.11305.

Commentary/ Reason:

  1. The euro held just above a 16-month trough, last traded at $1.12442, having found a measure of support from stronger-than-expected European business growth data.

  2. The Eurozone Nov Markit manufacturing PMI unexpectedly rose +0.3 to 58.6, stronger than expectations of a decline to 57.4. Hawkish ECB comments on Tuesday also boosted EUR/USD and sparked long liquidation in the dollar. 

  3. New concerns about the spread of COVID-19 however kept the currency in the gloomy mood. The riskier currency has been shaken in recent sessions by surging COVID-19 cases in Europe and renewed curbs, dousing investor hopes of a quick recovery in consumption and growth worldwide. Germany's outgoing Chancellor Angela Merkel said the latest surge was the worst experienced by the country so far, while Austria went into a new lockdown on Monday.

  4. The dollar has zoomed to its highest levels of the year on bets the Federal Reserve will hike rates to tame inflation. Markets also seem convinced Powell is more likely to respond sooner and harder to inflation.

  5. The EUR/USD bounced modestly from a fresh 2021 low, although bears retain control. The EUR/USD continues to push lower as sellers have dominated majority days of the last two weeks trading sessions.

  6. Wednesday will see quite a busy macroeconomic calendar, as the U.S. celebrates Thanksgiving on Thursday. The U.S. will publish October Durable Goods Orders, Q3 gdp, the latest FOMC Meeting Minutes and PCE inflation. Earlier in the day, Germany will release the November IFO survey on Business Climate.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93546 and 0.93730.

-        Support line of 0.92950 and 0.92776.

Commentary/ Reason:

  1. The Swiss franc extended its downtrend against the U.S. dollar on Wednesday, as strong demand for the greenback continued to grind around two-month top.

  2. The dollar rose for the fourth consecutive days against the franc, to last trade at 0.93357.

  3. The USD received a further boost post-Powell renomination as it leaves room for markets to flirt with the idea of a faster taper. With Powell remaining in the chair, investors anticipate further hawkish stances from the Fed.

  4. On the other hand, the franc holds on to its safe-haven appeal, as investors see the currency as a safe haven investment amid market uncertainties due to rising COVID-19 cases in Europe.

  5. The intraday bias in USD/CHF pokes resistance line from April, surrounding the 0.937. Alternatively, July’s high close to 0.9275 will challenge the bears.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 115.181 and 115.553.

-        Support line of 113.980 and 113.609.

Commentary/ Reason:                                        

  1. The dollar sat at 114.992 yen, marginally below a new 4-1/2-year top touched earlier today.

  2. The greenback scaled high as two-year Treasury yields surged to their highest levels since March 2020 and Fed funds futures priced a chance of three rate hikes next year. The interest rate differential will continue to be a big player in this market.

  3. The yen is also under pressure on reduced safe-haven demand on speculation China will steer toward a more accommodative policy after the PBOC removed hawkish phrases from its quarterly monetary policy report last Friday.

  4. Meanwhile, investors digest the latest comments from Japan on a potential oil reserves release. The broader market sentiment is expected to lead the way going forward.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.34770 and 1.35440.

-        Support line of 1.33430 and 1.32760.

Commentary/ Reason:

  1. Sterling traded at $1.33762, stays close to an 11-month low it touched overnight, against the rising dollar.

  2. The greenback also takes advantage of the prevalent risk-off market profile, courtesy of the concerns about European COVID-19 curbs.

  3. The pound erased last week’s gains against the U.S. dollar as the greenback maintained its bullish move ahead of the U.S. economic data release. U.S. GDP data and jobless claims due to be released later today are likely to dictate the direction for the dollar.

  4. Investors also will keep a close eye on headlines surrounding the negotiations on Brexit's Northern Ireland protocol.

GBPUSD