INTRADAY TECHNICAL ANALYSIS 8 FEBRUARY (observation as of 06:45 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 inched 0.20% lower, to trade at $1.14176 on Tuesday, still hovering around the 1-month high, having shot up 2.7% last week in its best performance since early 2020 on the tightening expectations.

  2. European bond yields soared on speculation of monetary tightening, after the ECB last week was considered to have adopted a more hawkish tone.

  3. The ECB President Christine Lagarde on Monday however, calmed some of those jitters, saying there were no signs that measurable monetary policy tightening would be required.

  4. The euro has held gains but has been unable to beat resistance around $1.1499 even as European bond yields have leapt. Eurozone bond yields rose, with Germany's 10-year government bond yield, the benchmark of the euro zone, up 2 basis points to 0.22%, its highest level since January 2019.

  5. The EURUSD is beginning to stall as buyers lose steam mid-rally. Price action now reflects a lack of bullish momentum rather than rising bearish sentiment.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92675 and 0.92867.

-        Support line of 0.92067 and 0.91888.

Commentary/ Reason:

  1. The dollar rose slightly against the Swiss franc on Tuesday, traded at 0.92517 franc.

  2. The greenback held its gains on firmer buying support, backed by better U.S. economic and employment data.

  3. Meanwhile the demand for safe haven Swiss franc remains, amid geopolitical tensions between of Ukraine-Russia.

  4. The USD/CHF pair has been in a strong bullish trend in the past few days as focus shifts to the possible divergence between the Fed and the Swiss National Bank (SNB).

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 115.607 and 116.107.

-        Support line of 114.607 and 114.107.

Commentary/ Reason:                                        

  1. The dollar crept 0.37% higher on the yen to 115.498, rose to a 1-week high.

  2. Strength in T-note yields today supported the greenback. It also fared better on the Japanese yen as the market still sees little chance the Bank of Japan following suit to tighten this year before inflation hits the bank’s 2% target.

  3. The yen also came under pressure after the dollar gained some footing following a surprisingly upbeat U.S. jobs report.

  4. Traders also bracing for U.S. inflation data due later this week, as a strong reading could bolster speculations for a bigger 50 bps Federal Reserve rate hike in March.

  5. The USD/JPY bulls remain in the driver’s seat but with a bumpy road ahead.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.35873 and 1.36493.

-        Support line of 1.34633 and 1.34013.

Commentary/ Reason:

  1. Sterling was at $1.35270 on Tuesday, marginally changed from opening today. The British pound eased against the dollar, with the pair moving away from a two-week high of $1.36272 last week.

  2. After a recent rally prompted by a hike rate from the Bank of England, the market took a breather, with investors digesting the central bank's guidance to quantitative tightening. Policymakers announced the start of tapering the central bank's £875 billion QE program by immediately stopping reinvesting the proceeds of expired gilts, as well as plans to offload the whole stock of corporate bonds by the end of 2023.

  3. GBP/USD was a calm manner after closing the previous week in the positive territory despite Friday's decline. The pair is having a difficult time making a decisive move in either direction. Despite the pullback, sellers appear to lack the conviction to drive the trend. Overall, longer-term sentiment remains bearish with the descending trendline acting as a key resistance level, containing rallies.

GBPUSD