INTRADAY TECHNICAL ANALYSIS 10 JANUARY (observation as of 07:00 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.13629 and 1.13817.

-        Support line of 1.12724 and 1.12537.

Commentary/ Reason:

  1. The euro declined 0.28% to trade at $1.13295, off the recent 1-week top touched on Friday.

  2. The rise in 10-year T-note yield to a 9-month high improving the dollar’s interest rate differentials.

  3. The dollar was supported after the US Federal Reserve is expected to hike interest rates as early as March due to persistent high inflation and an improving outlook for the labor market, while the European Central Bank is seen slower than other major central banks in tightening monetary policy.

  4. Elsewhere, concerns over Europe's slowing economic growth on the back of surging prices and rising COVID cases also weighed on sentiment.

  5. The EUR/USD seesawed rangebound with the bearish bias stays intact, ahead of the European session. Noticing that RSI and stochastic provides negative signals that support the expectations of achieving more decline in the upcoming sessions, noting that the targets begin at 1.127.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92382 and 0.92619.

-        Support line of 0.91613 and 0.91375.

Commentary/ Reason:

  1. The dollar reverses Friday’s pullback, climbed back towards the 1-week high it records the day before.

  2. The pair was last traded at 0.92067 franc.

  3. The gains tracked firming expectations that the Fed could raise rates as soon as March and several times this year - driving a bond market selloff and a rise in yields.

  4. Fed rate-hike concerns and virus updates will be catalysts for the next pair movement.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 116.387 and 116.636.

-        Support line of 115.580 and 115.330.

Commentary/ Reason:                                        

  1. The dollar firmed 0.26% on the yen to 115.775, fairly close to last week's five-year high of 116.342.

  2. The USD/JPY pauses previous three-day downtrend, bounces off during a sluggish session. Trade in the Asia session was thinned by a holiday in Japan.

  3. In addition to the absence of domestic players, who are the key for global bond markets, mixed concerns over the Fed’s next move and the coronavirus also limit the risk barometer pair’s latest moves.

  4. However, cautious sentiment ahead of this week’s US inflation numbers and Retail Sales for December may keep the US Treasury yields on the front foot, which in turn can keep the USD/JPY buyers hopeful.

  5. Central bank divergence also was weighing on the yen. The yen has been the most prominent loser among major currencies, as traders reckon the Bank of Japan is likely to lag global interest rate hikes.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.35993 and 1.36317.

-        Support line of 1.34815 and 1.34540.

Commentary/ Reason:

  1. The pound traded flat against the U.S. dollar on Monday. It last bought $1.35841, not far from Tuesday's two-month high of $1.35981.

  2. While the US Treasury yields supported the dollar broadly, sterling managed to hold its own with bets that the Bank of England (BoE) is likely to be hiking in tandem with the Fed.

  3. News that Britain will not introduce fresh COVID-19 measures against the rapid spread of the Omicron variant also supported sentiment.

  4. Investors continue to monitor signs of a slowing economic recovery, mounting inflationary pressure, record rises in COVID-19 cases and post-Brexit tensions over the Northern Ireland protocol.

GBPUSD