INTRADAY TECHNICAL ANALYSIS 16 FEBRUARY (observation as of 06:40 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 steady at $1.13547 on Wednesday, having jumped 0.45% the day before.

  2. The euro held on to overnight gains, having jumped on reports that some Russian forces had moved away from the Ukraine border, though, with tensions still elevated, the common currency failed to make further progress.

  3. The expectation of an aggressive Fed hike cycle also helps keeping a base for the dollar in place.

  4. Longer-dated U.S. Treasury and eurozone bond yields rose, as investors took comfort from the potential easing of tensions over Ukraine. The benchmark 10-year Treasury note rising more than 2% on the day at 2.03%, while Germany's 10-year yield touched its highest since 2018 on the day's possible easing of Russia-Ukraine tensions.

  5. The EUR/USD has bounced back from the descending trendline which may now contain price action as a key support level. EUR/USD has gathered bullish momentum early Wednesday and climbed toward mid-1.1300s with risk flows returning to markets. In case risk flows continue to dominate the financial markets, EUR/USD could preserve its bullish momentum. The pair needs to clear the near-term resistance that seems to have formed at 1.150 to extend its rebound.

  6. Rising US Treasury bond yields, however, could help the greenback stay resilient against its rivals and limit the pair's upside.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93057 and 0.93347.

-        Support line of 0.92117 and 0.91827.

Commentary/ Reason:

  1. The Swiss franc weakened to 0.92545 per dollar from the one-week high of 0.92264, after higher than expected U.S. inflation figures lifted the dollar amid increased expectations of faster monetary policy tightening by the Fed.

  2. On the other hand, Swiss National Bank Chairman Thomas Jordan said the central bank is taking the rise in consumer prices seriously and that inflation stubbornly remaining above 2% could lead to policy tightening, even though the strength of the Swiss franc has capped higher prices thus far. The SNB has been committed to its dovish stances, signalling it would only tighten policy after other major central banks.

  3. At the same time, demand for safe-haven assets slid as it lost some of their appeal with Russia-Ukraine tensions easing, after Moscow indicated it was returning some troops to base.

  4. The USD/CHF pair keeps fluctuating between 0.9211 support and 0.9305 resistance. Price needs to breach one of these levels to detect its next targets clearly, which keeps our neutrality valid until now. Breaching the mentioned resistance will push the price to achieve new gains that start by testing 0.9334 areas, while breaking the support will press on the price to turn to decline and visit 0.9182 initially.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 115.784 and 116.076.

-        Support line of 115.200 and 114.908.

Commentary/ Reason:                                        

  1. The safe haven yen softened slightly and was last at 115.650 per dollar, having briefly touched 115.010 on Monday, its strongest in a week.

  2. An easing of geopolitical risks of Russian-Ukraine fuelled a stock market rally Wednesday that curbed the liquidity demand for the safe haven currency.

  3. Higher T-note yields meanwhile strengthened the dollar’s interest rate differentials, as well as helped by debate about more aggressive U.S. interest rate hikes.

  4. The USD/JPY pair leaned to breached resistance that appears on the chart and begins the attempt to recover, which hints heading to resume the main bullish trend.

  5. On the flip side, the USD/JPY first support would be at 115.200, and sustained break would expose the 50-DMA at 114.908.

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 rose 0.17% to trade at $1.35545 on Wednesday, advancing after slipped to a 1-week low overnight.

  2. Rate hikes expectation are supporting the British pound, with the Bank of England is expected to raise rates by a further 25 basis points at its March meeting. That would be the first time the Bank has raised rates at three meetings in a row since 1997.

  3. The country’s jobs report also strengthened expectations of higher interest rates from the BoE. Data showed the UK job market remained strong, with staff on businesses' payrolls up by 108,000 in January from the prior month despite Omicron.

  4. The market also braced for hawkishness of Fed, after the Labor Department reported PPI increased by the most in eight months in January, a reminder that high inflation could persist through much of this year. The higher than expected U.S. inflation figures supports the dollar, on expectations of faster monetary policy tightening by the Fed.

  5. Easing tensions in Eastern Europe improved the financial market mood.

  6. Intraday bias in GBP/USD remains neutral as sideway trading is still extending. On the upside, break of 1.3587 will resume the rebound to 1.3650 resistance. On the downside, however, break of 1.346 will bring retest of 1.340 low.

GBPUSD