INTRADAY TECHNICAL ANALYSIS 4 FEBRUARY (observation as of 07:10 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.14990 and 1.15699.

-        Support line of 1.12697 and 1.11989.

Commentary/ Reason:

  1. The euro was at $1.14556, lifted to its highest since Jan. 14, after ECB president Christine Lagarde acknowledged mounting inflation risks and left the door open to rate hikes this year.

  2. The pair is headed for 2.65% weekly gains.

  3. The ECB kept policy unchanged as expected on Thursday, staying on track to provide copious stimulus this year even as inflation runs at a record high, exceeding both the bank's 2% target and its projections.

  4. Yields in Europe leapt overnight after the ECB's hawkish turn, with the yield on benchmark 10-year German bunds up 12 bps to an almost three-year high of 0.155%.

  5. An elevated price pressures also are hawkish for ECB policy after Thursday’s data showed Eurozone Dec PPI rose stronger than expectations.

  6. The defensive mood dented the dollar after an earlier step to regain its footing.

  7. The EUR/USD pair trades near the January high at 1.1482, approaching the next possible bullish target. The daily chart shows that the pair is currently challenging a bearish 100 SMA after breaking above a still flat 20 SMA. The RSI indicator heads firmly north at around 60, all of which supports further gains ahead, particularly if the pair holds around the current level.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92427 and 0.92664.

-        Support line of 0.91661 and 0.91424.

Commentary/ Reason:

  1. The dollar jumped 0.20% against the Swiss franc on Friday, traded at 0.92099 franc.

  2. Though gradual decline since early of the week put the pair headed around 1% weekly losses.

  3. The greenback on Friday soars on firmer buying support, backed by better U.S. economic and employment data.

  4. A risk-on market mood today dented the prospects of the Swiss franc, which usually rallies on risk aversion. Though demand for safe-haven assets is seen to remain higher amid geopolitical tensions between Russia and NATO members, as European leaders supported Ukrainian President Volodymyr Zelenskiy’s decree to boost Ukraine’s armed forces.

  5. The USD/CHF pair settles below 0.9200 level, to keep the negative pressure valid for the upcoming period, supported by the EMA50 that pushes the price to the downside, waiting to visit 0.9166 as a next station. Outlook in USD/CHF is unchanged and intraday bias remains mildly on the downside.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 115.177 and 115.445.

-        Support line of 114.312 and 114.045.

Commentary/ Reason:                                        

  1. Moves in the pair were modest on Friday, leaving the yen at 114.989 per dollar, weaker than levels below 114.5 seen against the greenback yesterday.

  2. After hawkish shifts from the ECB and the BoE, the yield on benchmark 10- and five-year Japanese government bonds climbed to six-year highs in early Tokyo trading, with analysts starting to speculate that even the Bank of Japan might have to follow peers and tighten monetary policy.

  3. Intraday bias in USD/JPY remains neutral for the moment. Bulls are engaging and eye a break of 115 the figure. There could be some selling pressure to hold off initial tests, but if bulls commit to USD/JPY, then, the price would be expected to be attracted towards 115.17 and 115.45 on a break of 115 the figure.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.36445 and 1.36800.

-        Support line of 1.35295 and 1.34940.

Commentary/ Reason:

  1. Sterling was at $1.35939 on Friday, having risen to a two-week top of $1.6326 on Thursday, and headed for 1.60% weekly gains.

  2. The Bank of England on Thursday announced its second straight rate hike in three months, which helped buoy sterling. The Bank of England raised rates to 0.5% and nearly half its policymakers wanted a bigger increase to contain rampant inflation.

  3. The GB/PUSD pair expected to achieve additional positive targets that reach 1.3644 followed by 1.3680.

  4. Bullish trend will remain valid and active for the upcoming period, noting that losing momentum will press on the price to rebound bearishly and test 1.352 level initially.

GBPUSD