INTRADAY TECHNICAL ANALYSIS 12 MAY (observation as of 07:40 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 was flat on Thursday at $1.05065, continuing to trade mostly sideways since plumbing a more than five-year low of 1.04712 at the end of last month.

  2. The euro gave up an early advance and fell modestly, under pressure after U.S. inflation were moderated less than markets had expected, keeping the Federal Reserve on course to tighten policy aggressively.

  3. The euro also remained pressed as market heeding concerns of further curtailing Russian oil imports, which could push some European nations into economic distress.

  4. Losses were limited as the ECB overnight firmed up expectations that it will raise its policy interest rate in July for the first time in more than a decade.

EURUSD              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.99806 and 1.00157.

-        Support line of 0.98672 and 0.98321.

Commentary/ Reason:

  1. The dollar added 0.17% against the Swiss franc on Thursday, to trade at 0.99571 franc, hovering just below the highest since 2019 that it records last week.

  2. The greenback was still ahead against other havens, commodity currencies and emerging market currencies alike. A sharp stocks selloff today boosted demand for the safe-haven currency dollar and as the Federal Reserve was seen as tightening monetary policy faster and more than peers.

  3. China’s COVID-19 woes also grabbed some attention, with news of Shanghai’s lockdown measures kept traders anxious.

  4. In the meantime, EU’s plans to phase out imports of Russian oil over its war in Ukraine, pressuring Europe's energy security, inflation, and growth.

  5. The USD/CHF pair resumes its positive trading clearly to support the continuation of the expected bullish trend scenario on the intraday and short-term basis, noting that the next target rises to 0.9980. Overbought RSI conditions will challenge the quote’s further upside. Alternatively, in a case where USD/CHF remains bearish past 0.9867, around 0.9832 will be crucial for the bears to track.

  6. Overall, USD/CHF bulls are likely to face headwinds, but the overall trend remains positive.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 131.441 and 132.809.

-        Support line of 128.705 and 127.337.

Commentary/ Reason:                                        

  1. The Japanese yen strengthened 0.65% versus the greenback at 129.106 per dollar.

  2. The yen garnered support on Thursday from an easing in long-term Treasury yields. The 10-year Treasury yield retreated to an almost two-week low of 2.862%, from a multi-year peak above 3.2% at the start of the week.

  3. The yen also supported after Goldman Sachs on Wednesday touted yen as an ideal recession hedge and said the currency now has “significant value” after Monday’s plunge to a 20-year low against the dollar.

  4. The dollar began the week on a strong footing, buttressed by sharply rising U.S. yields and by investors' tilt toward safety as lockdowns in China, war on the edge of Europe and fear about higher interest rates that sent a nervous jolt through markets.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.23951 and 1.24570.

-        Support line of 1.21949 and 1.21330.

Commentary/ Reason:

  1. Sterling was last trading at $1.21988, down 0.40% on the day, to hover just above a two-year low after UK Q1 GDP came in below expectations.

  2. Given last week’s BoE monetary policy report, this further consolidate the view that growth will materially slow down throughout the year, highlighting the stagflation risks that the UK economy is facing. What’s more, with the cost-of-living squeeze now more prominent, growth will take a bigger hit in Q2.

  3. Stand-off over post-Brexit trade rules for Northern Ireland also deepens. In the latest escalation of bilateral tensions, Britain this week hinted again at taking unilateral actions on a protocol that grants Northern Ireland a unique status in post-Brexit trade relations between the two sides, which has met strong objections from EU leaders, with some even warning about the possibility of a trade war.

GBPUSD