INTRADAY TECHNICAL ANALYSIS 2 DECEMBER (observation as of 05:35 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.14077 and 1.14646.

-        Support line of 1.12236 and 1.11666.

Commentary/ Reason:

  1. The single currency rose marginally to $1.13224.

  2. The euro was down from a two-week high touched on Tuesday, on weaker-than-expected European economic data on Wednesday that weighed on EUR/USD. The Eurozone Markit manufacturing PMI was revised downward by -0.2 to 58.4 from 58.6.  Also, German Oct retail sales unexpectedly fell -0.3% m/m, weaker than expectations of +0.9%.

  3. The dollar recovered from early losses on increased safe-haven demand after news that the first case of the Omicron variant was found in the U.S.  The dollar also found support from a hawkish Fed Beige Book.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92755 and 0.93193.

-        Support line of 0.91337 and 0.90899.

Commentary/ Reason:

  1. The dollar rose 0.22% higher against the Swiss franc on Thursday, last traded at 0.92076 franc, bounced to attempt recovery of three-week low touched Tuesday.

  2. The pair struggles to keep the gains as the Swiss franc holds on to its safe-haven appeal in cautious trading as traders digested news of the Omicron variant of COVID-19.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 113.669 and 114.060.

-        Support line of 112.403 and 112.012.

Commentary/ Reason:                                        

  1. Against Japan's currency, the U.S. dollar edged 0.28% higher to 113.0778 yen , but remained close to Tuesday's low of 112.537, a level not seen since Oct. 11.

  2. The safe-haven yen hovered near a seven-week high on Thursday as the Omicron coronavirus variant established itself as the dominant strain in South Africa and continued to spread globally.

  3. Higher U.S. T-note yields on the day made the dollar to gain ground on the Japanese currency, supported on Powell's reiterated hawkish tone overnight. Federal Reserve Chair Jerome Powell signalled a faster taper of stimulus despite the risks around the Omicron COVID-19 variant.

  4. Widening policy divergence between Japan and the U.S., with the Fed signalling a hawkish stance, while the BoJ repeatedly stated its commitment to retain easy monetary policies gave an upper hand to the dollar.

  5. The USD/JPY pair has pulled back lower trend. Currently, buyers have begun to return at this support level and price action may move forward hugging the trendline. Momentum indicators have downward trajectories.  

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.33529 and 1.33880.

-        Support line of 1.32391 and 1.32040.

Commentary/ Reason:

  1. Sterling rose around 0.10% against the dollar, last traded at $1.32866.

  2. Sterling managed to gather recovery momentum after plunged to a near one-year low of $1.31945 on Tuesday.

  3. The currency pair came under pressure early last month when the BoE opted to maintain interest rates at current levels, disappointing market expectations for a hike. Since then, the pound has continued to lose value versus the dollar, owing to increased market expectations for US Federal Reserve rate rises in 2021 and, more recently, the discovery of the Covid-19 Omicron variant, which has harmed the risk appetite on the pound.

  4. Positive news on the pandemic front and fresh signals of a BoE rate hike might potentially give confidence to the pound bulls.

  5. The GBP/USD pair continues to consolidate around the 1.323-1.335 mark. New developments in fundamentals are the most likely to have significant effects on price action.

GBPUSD