INTRADAY TECHNICAL ANALYSIS 29 APRIL (observation as of 08:00 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.06617 and 1.07159.

-        Support line of 1.04863 and 1.04321.

Commentary/ Reason:

  1. The euro added 0.40% on the last trading day of April, to stand at $1.05440 as the dollar pauses for breath.

  2. The euro, however, was still on track for its worst monthly performance since January 2015, after hitting a five-year low against of $1.04712 overnight.

  3. The euro has lost 5% on the dollar in April and just over 7% on the dollar since Russia's invasion of Ukraine on Feb 24.

  4. The dollar was buoyed this week by bets on rising U.S. interest rates and worries about growth in Europe and China. Market participants increasingly pricing in a widening divergence opening between the performance of the eurozone and U.S. economies and subsequently the outlook for European Central Bank and Fed policies.

  5. The outlook for the Fed to raise the funds rate by 50 bp at next week’s FOMC meeting is bullish for the dollar.

  6. The euro, meanwhile, was weakened following the halt in Russian gas supplies to Poland and Bulgaria, which has investors concerned about Europe's energy security, inflation and growth. Increased likelihood that Germany to join other European Union member states in an embargo on Russian oil also put pressure on the euro.

  7. The EUR/USD pair staged a rebound. The one-week-old descending trend line forms the initial resistance at around 1.0661, a 20-period SMA, followed by psychological 1.07150 next. On the downside, the first support is located at 1.04863 and 1.04321.

  8. Traders were waiting for euro area GDP and “flash” inflation data, due at 0900 GMT. European currencies could benefit if the inflation data surprises to the upside, prompting remarks from more hawkish European Central Bank members

EURUSD              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.97682 and 0.97993.

-        Support line of 0.96667 and 0.96353.

Commentary/ Reason:

  1. The dollar was traded flat against the Swiss franc on Friday, though remained floated not far from an almost two-year top touched overnight.

  2. The greenback was last at 0.97110 franc.

  3. The pair remains elevated amidst a risk-off market sentiment, triggering a flight to safe-haven assets. China’s COVID-19 woes grabbed some attention, with news of Shanghai’s lockdown measures kept traders anxious. The USD/CHF also has been driven higher by a strong rally in U.S. dollar thanks to the Federal Reserve turning increasingly hawkish.

  4. In the meantime, the Ukraine-Russia conflict escalated as Russian company Gazprom halted natural gas exports to Poland and Bulgaria, pressuring Europe's energy security, inflation and growth.

  5. The USD/CHF pair to support the continuation of the bullish trend in the upcoming sessions, noting that our next target extends to 0.9768, around the 22-month high. The EMA50 supports the expected rise, which will remain valid conditioned by the price stability above 0.9666.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 131.930 and 133.048.

-        Support line of 128.314 and 127.196.

Commentary/ Reason:                                        

  1. The dollar held firm at around the 20-year high on Friday against the Japanese yen, though slipped to 0.40% at 130.261. The yen is down more than 7% in April, its worst month since November 2016.

  2. Trade was thinned in the Asia session by a public holiday in Japan.

  3. The U.S. dollar’s recent gains have been most significant against the yen, in the wake of the yen's tumble after the Bank of Japan vowed to buy unlimited amounts of 10-year bonds daily to defend its yield target. The bank's strengthening of its commitment to ultra-low interest rates sent the U.S. dollar to a fresh high, weakened the Asian currency and pushed borrowing costs for U.S. dollars in currency derivatives markets sharply higher.

  4. The uber-dovish decision set Japan miles apart from the U.S. Fed, where markets are priced for 150 basis points of hikes in just three meetings, and triggered a fresh rush of funds into the dollar ahead of all else.

  5. The USD/JPY may continue to appreciate ahead of the FOMC interest rate decision on May 4. The USD/JPY pair rebound bullishly just above the support line and return to the main bullish channel again, which stops the correctional bearish scenario and lead the price to resume the bullish trend again, on its way to achieve positive targets above 130. The bullish bias will be suggested in the upcoming sessions.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.27705 and 1.28530.

-        Support line of 1.25035 and 1.24210.

Commentary/ Reason:

  1. The dollar gives back some of its gains throughout the past few weeks with modest moves across the board.

  2. The pound rose 0.90% to $1.2570 on Friday, though still headed for a 2.88% weekly drop against the dollar, and 5% in April, its worst showing since October 2016.

  3. Sterling was pressured throughout this week as soft retail sales data prompted a re-think of Britain's rates outlook, to a possible slowdown in the expected upward movement of interest rates.

  4. Fears about the economic impact of China's COVID-19 lockdowns and as an aggressive pace of U.S. rate hikes also sent investors scrambling for safety, benefitted to the greenback. Protracted Russia-Ukraine conflict and Europe energy crisis also continue to weigh on the market mood.

GBPUSD