INTRADAY TECHNICAL ANALYSIS 17 MARCH (observation as of 06:30 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.10662 and 1.11035.

-        Support line of 1.09453 and 1.09079.

Commentary/ Reason:

  1. The euro bounced back against the dollar after caught a boost from peace hopes, to stand at $1.10258 on Thursday.

  2. Strength in EUR/USD weighed on the dollar after Russia hinted at progress in peace talks with Ukraine. Ukrainian President Volodymyr Zelenskiy said negotiations were becoming "more realistic" and Russia said proposals under discussion were "close to an agreement."

  3. Rally in the equity markets also reduced the liquidity demand for the dollar. While the U.S. economic data Wednesday were bearish for the dollar after Feb retail sales, and the Mar NAHB housing market index, were weaker than expected.

  4. The dollar, however, still holds its ground after the Fed raised the fed funds target range by 25 bp and projected a 25 bp rate hike at each FOMC meeting this year. Treasury yields spiked to nearly three-year highs overnight.

  5. The EURUSD is climbing back towards the resistance line albeit with moderate conviction. EUR/USD is on the verge of a break higher as it continues on the momentum of the aftermath of the Federal Reserve meeting.

  6. The price line represents the lower bound of a previous consolidation channel. Momentum indicators are bullish with sharp upward trajectories.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.94667 and 0.94954.

-        Support line of 0.93737 and 0.93450.

Commentary/ Reason:

  1. The dollar remained elevated to trade at 0.94043 on Thursday, after it jumped to a more than 11-month high overnight.

  2. The dollar stays supported 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. USD/CHF remains on the bull’s radar despite the latest pullback moves. It has failed at the 0.9466 resistance line, with long upper shadows reflecting the bearish sentiment. A reversal is underway with price action likely headed towards the 0.937 support line.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 119.313 and 119.685.

-        Support line of 118.112 and 117.741.

Commentary/ Reason:                                        

  1. The dollar hit 119.116 per yen overnight, its highest since early 2016, and was traded last at 118.804 on Thursday.

  2. The yen was pinned to a six-year low on the dollar and struggled against crosses on Thursday, as a rate hike with a hawkish outlook from the U.S. Federal Reserve underscored just how far the Bank of Japan is likely to lag worldwide policy tightening.

  3. The Fed has raised interest rates for the first time since 2018 and policymakers' projections for as many as six more hikes this year were even more aggressive than expected.

  4. By contrast the BoJ is committed to extremely accommodation policy settings. The Bank of Japan will conclude a two-day meeting on Friday and is not expected to unwind accommodative settings.

  5. The gap between benchmark 10-year Treasury yields and 10-year Japanese bond yields hit its widest in nearly 2-1/2 years overnight at 1.99%.

  6. The interest rate differentials and Japan's position as a commodity importer also suggest the possibility of further upside potential for USD/JPY following this year.

  7. A return of risk appetite was no help to the yen, either as hopes for a breakthrough in Russia-Ukraine peace talks set equities surging and safe-havens falling.

  8. However, the USD/JPY pair appears to be stalling after bullish momentum started to lose steam. A rise in selling pressure indicates that a reversal may be on the cards as bearish sentiment appears to be rising. Momentum indicators are bullish although RSI is flattening beyond the overbought zone. 

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.31863 and 1.32337.

-        Support line of 1.30330 and 1.29857.

Commentary/ Reason:

  1. Sterling hovered at $1.31494, traded just below a new 1-week high touched earlier in the day.    

  2. The rebound comes on the eve of tomorrow’s Bank of England interest rate decision with Sterling attempting mount a larger counter-offensive off downtrend support.

  3. At 1200 GMT, the Bank of England is expected to raise interest rates for a third straight meeting and focus will be on any new thinking from policymakers about juggling the competing pressures of inflation and slowing growth.

  4. The GBP/USD pair has rebounded from the 1.300 price floor, breaking the previous resistance line. Currently conviction should be sufficient to sustain the rally and return the pair to the previous trading range.

GBPUSD