INTRADAY TECHNICAL ANALYSIS 22 APRIL (observation as of 7:50 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.09365 and 1.10005.
- Support line of 1.07295 and 1.06655.
Commentary/ Reason:
The euro was flat at $1.08302 on Friday, given up Thursday's bounce and is not far above a two-year low, as traders reacted to Federal Reserve officials including Chair Jerome Powell offering further sign posting of aggressive interest rate hikes this year.
Still, the euro was headed for a 0.14% weekly gain against the dollar.
Hawkish Fed comments Thursday pushed T-note yields higher, strengthening the dollar’s interest rate differentials.
Market also reeling from comments by the ECB officials that the central bank might start hiking euro zone rates as early as July. German two-year yields hit an eight-year high overnight.
The EUR/USD pair bounced downwards after approaching the waited positive target at 1.0935, to settle below the EMA50, which hints heading to resume the main bearish trend. Continuation of the negative pressure and breaking 1.07300 will push the lower.
Global PMI figures are due later today. The dollar may receive further support from safe haven demand if the April PMIs generate market concerns about the global growth outlook, especially since recent data have flattered the U.S. recovery.
The euro meanwhile is nervous ahead of Sunday's presidential run-off vote in France.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.95761 and 0.96140.
- Support line of 0.94534 and 0.94154.
Commentary/ Reason:
The franc remained pressured in the Friday session, not far from a 22-month low recorded overnight as hawkish U.S. Fed comments Thursday were bullish for the dollar.
The Swiss franc was traded 0.17% lower at 0.95496 dollar and headed for 1.13% weekly losses.
Risk-on market mood and higher U.S. Treasury yields weighed on the Swiss franc. The franc is expected to continue to remain weak ahead of the FOMC meeting on May 3 and 4.
The Swiss franc fall is courtesy of market sentiment. Due to its status as a safe-haven peer, it usually depreciates in times of risk-on market mood. Also, the Swiss National Bank (SNB), one of the most actives central banks in FX, likely favours a weak CHF, so it’s not rare seeing it intervening in the USD/CHF pair.
The USD/CHF pair resumed its positive trades to approach our waited target at 0.9576, reinforcing the expectations of continuing the bullish trend, noting that the next station above 0.96 at 0.9614.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 130.072 and 131.003.
- Support line of 127.060 and 126.129.
Commentary/ Reason:
The dollar was down 0.20% at 128.047 yen on Friday, but still on course for 1.50% weekly gains, and its seventh consecutive weekly gain.
Higher U.S. yields hoist the greenback. While overnight Fed Chairman Jerome Powell said a 50 basis-point rate hike was on the table at the next meeting in two weeks, Japan is pinning its government bond yields near zero.
A slump in Japan’s Nikkei on Friday boosted the liquidity demand for the Japanese yen on the day.
Japan's core consumer prices rose at the fastest pace in more than two years in March, raising worries of higher energy and food cost. The core CPI jumped 0.8% in March from a year earlier, government data showed on Friday. Policymakers might try and strengthen the currency in order to relieve households squeezed by higher energy and imported food costs.
Japan has been running trade deficits as energy import costs soar, further undermining the yen. While a weak yen boosts Japanese exports, it inflates import costs for energy and food products that have already seen prices jump due to the war in Ukraine.
Intraday bias in USD/JPY remains neutral. Deeper retreat cannot be ruled out, but downside should be contained above 126.129 resistance turned support to bring another rally. On the upside, above 130.0 will resume larger up trend to 131.0 projection level next.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.30948 and 1.31253.
- Support line of 1.29959 and 1.29730.
Commentary/ Reason:
Sterling witnessed aggressive selling on Friday, as it slumped 0.85% against the dollar, to trade at $1.29193, at its lowest in more than 15 months.
It was headed for 0.80% weekly losses against the dollar.
The pound is under heavy pressure today, with the BoE is expected to raise rates at its next meeting in May. Investors are divided between a 25bp or 50bp hike.
On the other hand, the dollar remained well supported by firming expectations for a more aggressive policy tightening by the U.S central bank. Fed Chair Jerome Powell on Thursday confirmed a 50bps rate hike at the upcoming policy meeting on May 3-4 and also hinted at consecutive increases this year. This, in turn, pushed the yield on the U.S government bond higher, along with the risk-off impulse, underpinned the greenback.
Brexit issues also loom again in the news. Sterling faces some political risks again where the Financial Times today reports that the UK is once again threatening to rip up parts of the Northern Ireland protocol, agreed as part of the Brexit deal.
Friday’s UK economic data also was negative for the pound. UK monthly Retail Sales figures was seen falling 1.4% on the month in March, dropping for the third time in the last four months in March as the cost-of-living crisis weighed ever more heavily on consumer confidence. Adding to this, sales excluding the auto motor fuel sales also missed consensus estimates and fell by 1.1% during the reported month.
Market participants now look forward to the release of the flash PMI prints from the UK and the U.S. for a fresh impetus.
Traders also will further take cues from the BoE Governor Andrew Bailey's appearance later during the U.S. session for some trading clues.
