INTRADAY TECHNICAL ANALYSIS 4 MARCH (observation as of 07:15 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.11543 and 1.12378.

-        Support line of 1.09873 and 1.09038.

Commentary/ Reason:

  1. The euro was sent further 0.38% lower to $1.10225, traded just above the day's lows when it records the lowest since May 2020.

  2. The pair has lost 1.82% this week, which would be the euro's worst week since June 2021.

  3. The ongoing conflict in Ukraine is weighing on the euro and benefiting the dollar, while the prospect of sustained high commodity prices continued to drag on expectations of European economic growth.

  4. The war will also be likely to slow European Central Bank policy normalisation, and at next week's ECB meeting, any hints of rate hikes may be out of the question. In contrast, the U.S. Federal Reserve is all but certain hike interest rates at its March 15-16 meeting for the first time since the pandemic.

  5. Adding to worries in early trade was news Ukraine's Zaporizhzhia nuclear power plant, the largest of its kind in Europe, was on fire early on Friday after an attack by Russian troops.

  6. The EUR/USD sell-off has sparked up again as the pair continues to new lows. Rising bearish activity has moved the pair beyond a recent low of support level. Momentum indicators have downward trajectories and RSI is testing oversold conditions. 

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92163 and 0.92398.

-        Support line of 0.91403 and 0.91168.

Commentary/ Reason:

  1. The dollar rose on Friday against the safe haven Swiss franc, to trade at 0.91903. Though headed for 0.80% weekly losses.

  2. The dollar was supported today as the odds of Fed’s faster, and more rate hikes seem to put a floor under the prices, even the market’s risk-aversion wave backed by the Ukraine-Russia headlines.

  3. A slump in stocks on the day also boosted the liquidity demand for the dollar.

  4. Intraday bias in USD/CHF remains neutral and outlook is unchanged. More sideway trading could be seen. Break of 0.9216 will next target 0.9239 resistance. And on the downside, break of 0.9140 will bring deeper fall back to 0.9116 support.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 115.731 and 116.060.

-        Support line of 114.667 and 114.338.

Commentary/ Reason:                                        

  1. The dollar was flat against the safe haven yen on Friday, as it gradually decline from Thursday’s 1-week high to trade at 115.507.

  2. The pair was put in a mixed performance as traders try to decide if the escalation of the war between Russia and Ukraine and the imposition of harsh sanctions on Russia by Western countries will drive risk-on or risk-off sentiment.

  3. USD/JPY was moderately higher on Friday as strength in stocks weakened the safe-haven demand for the yen.

  4. The yen is also weighed Japan's trade position is set to worsen given it is a major importer of energy and resources. High energy prices in turn have prevented the Japanese yen from benefiting as much from the safe haven flows, given Japan's position as the importer of energy.

  5. USD/JPY price action has failed to move beyond the 115.731 resistance line, as there is little appetite from market participants to drive price action. The pair is likely to continue floating higher, led by the trendline is the absence of a clear trend.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.34420 and 1.34943.

-        Support line of 1.32727 and 1.32203.

Commentary/ Reason:

  1. Sterling was on the back foot at $1.33328.

  2. The British pound has been tugged lower with the euro since Russia's invasion, while the dollar was supported by the comments from Federal Reserve Chair Jerome Powell in which he reiterated his support for a 25-basis point interest rate hike this month.

  3. Currency traders are trying to assess how the escalation of tensions and its economic impact might alter the Bank of England’s rate hike path in the near term, with money markets currently pricing in a 25-basis point rate increase from the BoE in March.

  4. The GBP/USD pair continues to oscillate around the current price line and will likely continue to do so until there is material change in the fundamentals landscape. There is, however, a longer-term bearish bias and the resistance line is edging closer to price action, having more impact in the medium term. 

GBPUSD