INTRADAY TECHNICAL ANALYSIS 11 JANUARY (observation as of 06:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.13701 and 1.13988.
- Support line of 1.12773 and 1.12486.
Commentary/ Reason:
The euro stood at $1.13417, 0.15% higher on the day, while remains stuck in the middle of its trading range since mid-November.
The euro posted moderate gains after the dollar was weighed by pullback in 10-year T-note yield.
Traders now looked to incumbent Fed Chair Jerome Powell's nomination hearing later in the day for new clues on the timing and pace of policy normalisation. Divergent central bank policies between the Fed and ECB are expected to influence the pair’s next movement.
The EUR/USD pair shows new bullish bias to approach gradually from 1.137 level, which open the way to achieve more expected gains on the intraday basis, supported by steady RSI and firmer Momentum lines.
Alternatively, the stated 200-SMA and short-term support line, respectively around 1.1277, restricts the quote’s immediate downside. Also acting as the key support is at level of late November to December advances, around 1.125.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.93038 and 0.93413.
- Support line of 0.91827 and 0.91453.
Commentary/ Reason:
The dollar eased 0.12% and traded at 0.92592 franc, stalled just below the 3-week peak of 0.92747 it touched overnight.
The dollar holds on to its broad gains, amid firming expectations of imminent rate hikes by the Fed.
Contrarily, the SNB has yet not signalled any policy tightening, as domestic inflation is still well below those of its main trading partners and should maintain negative interest rates through 2022. At the same time, sights deposits in the SNB increased by nearly CHF 2 billion in the week ending January 7th, a possible indication that the central bank is capping the franc’s appreciation.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 115.899 and 116.220.
- Support line of 114.860 and 114.538.
Commentary/ Reason:
The dollar was little changed at 115.232 yen after bouncing off a one-week low of 115.046 overnight.
The USD/JPY pauses previous four-day downtrend, bounces off during a sluggish session.
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.
The yen remained close to 5-year lows as monetary policy between Japan and other countries continued to diverge. While other central banks signalled readiness to normalize monetary settings, the BoJ is widely expected to maintain its ultra-loose policy as Japanese inflation remained well below the 2% central bank target.
The USD/JPY pair has pulled back from the 116.22 ceiling. Buyers appear to have returned after the break, with price action moving closer to a strong support area at the ascending trendline. Bullish rebounds typically take place at the trendline.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.36164 and 1.36447.
- Support line of 1.35249 and 1.34967.
Commentary/ Reason:
Sterling was stable at $1.35967, hovering just a smidge below Monday's two-month high of $1.36031.
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 rates in tandem with the Fed.
News that Britain will not introduce fresh COVID-19 measures against the rapid spread of the Omicron variant also supported sentiment.
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.
The GBP/USD pair is testing a key resistance area at the 1.361 resistance line. Small-bodied candles suggest that buyers are losing steam and that the recent rally may not last. Overall, longer-term sentiment remains bearish. Momentum indicators are bullish with RSI flattening just below the overbought line.
