INTRADAY TECHNICAL ANALYSIS 23 MARCH (observation as of 07:10 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.10931 and 1.11545.

-        Support line of 1.09703 and 1.09089.

Commentary/ Reason:

  1.  The euro held at $1.10328 on Wednesday, bounced off the 1-week low touched overnight.

  2. The dollar moved slightly lower as a rally in equity market curbed the liquidity demand for the dollar. Though still hold its ground after hawkish comments Tuesday from San Francisco Fed President Daly, and St. Louis Fed President Bullard pushed the 10-year T-note yield up to a 2-3/4 year high.

  3. The EUR/USD rose moderately and garnered support on signs of strength in the European economy after Tuesday’s data showed Eurozone Jan construction output rose the largest increase in 10 months.  Also, strength in German bund yields is supportive for the euro after the 10-year German bund yield climbed to a 3-1/4-year high.

  4. The EUR/USD has rejected the 1.113 resistance line and price action has narrowed to since yesterday’s trading reflects indecision. The pair will likely oscillate within range for the near-term until a material change in fundamentals.

  5. Flash manufacturing PMI surveys from Europe due Thursday will be the next hurdle for the euro.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.94238 and 0.94570.

-        Support line of 0.93162 and 0.92830.

Commentary/ Reason:

  1. The dollar advanced 0.18% against the Swiss franc on Wednesday, to trade at 0.93445.

  2. The franc eased against the greenback on worries over the U.S. rate hike campaign to stabilise inflationary pressures. The odds of Fed’s faster, and more rate hikes also seem to put a floor under the dollar, while investors also assessed the fallout from an intensifying Russia-Ukraine conflict.

  3. The USD/CHF buyers have found support and price action is now headed back towards the 0.942 resistance line. This price level is significant as it has represented an obstacle for buyers in the past. Momentum indicators remain bullish, and RSI is approaching overbought conditions once again.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 121.919 and 122.631.

-        Support line of 119.615 and 118.903.

Commentary/ Reason:                                        

  1. The Japanese yen continued its slide on Wednesday, touched a new low since 2016, and last traded at 121.115 per dollar.

  2. The yen slumped, as policy gap between Japan and the rest of the world was widening and high energy prices were taking a toll on the country's trade balance.

  3. High commodity prices are bad news for the yen, as Japan imports the bulk of its energy, widening the country's trade deficit.

  4. Higher T-note yields put pressure on the yen. The benchmark 10-year yields rose to 2.414%, its fresh highs since May 2019.

  5. The yen also weighed as markets turned more positive on riskier assets on the day.

  6. The USD/JPY pair continues to find support in mid-week trading, with strong buying activity driving price action in yesterday’s trading. In the last 12 trading sessions, a bullish bias has dominated the session and driven price action higher. Momentum indicators suggest the pair is strongly overbought.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.33157 and 1.33757.

-        Support line of 1.31216 and 1.30617.

Commentary/ Reason:

  1. Sterling was traded at $1.32703, its highest against the dollar in nearly three weeks, as focus turns to British finance minister Rishi Sunak's Spring Statement and fresh economic data including inflation, PMIs and retail sales for an update on the UK economic recovery, scheduled later today.

  2. The impetus for an aggressive pace of tightening started to fade as the BoE warned last week of risks to growth posed by the Russian invasion of Ukraine and adopted a softer tone during its last monetary policy meeting. Still, a hotter-than-expected inflation could fuel again rate hike expectations.

  3. The GBP/USD pair has broken the previous resistance line with buyers returning with conviction to drive the rally. The 1.331 and 1.338 resistance line remains in sight and represents a previous support. Longer-term, sentiment remains bearish with the descending trendline representing a key obstacle to previous rallies.

GBPUSD