INTRADAY TECHNICAL ANALYSIS 20 MAY (observation as of 07:55 UTC)


Important Levels to Watch for:

-        Resistance line of 1.06404 and 1.06965.

-        Support line of 1.04589 and 1.04029.

Commentary/ Reason:

  1. The euro was flat on Friday, traded at $1.05748 and still on course for a 1.66% weekly gain.

  2. The euro hovering near the two week high touched overnight, on renewed buying interest amid slightly easing demand for the greenback due to softer U.S. Treasury yields. The beleaguered yield on the 10-year Treasury note sank to a more than three-week low %, offering the euro some relief on Friday.

  3. The euro also found support from the hawkish account of the ECB’s April 13-14 policy meeting on Thursday, where some policymakers wanted to act without delay to achieve price stability.

  4. However, earnings guidance among Wall Street firms suggests reasons for investors to pile into the US dollar, seeking for safe haven.

  5. The EUR/USD pair trades at the upper end of its weekly range, with limited bullish potential. Momentum indicator consolidates around its midline while the RSI heads modestly higher within negative levels, failing to confirm buying strength.

  6. If the bulls manage to charge higher, a move will be towards resistance of 1. 06404 to 1.0696. On the flip side, if sellers return and spark a bearish reversal, initial support appears at 1.0458, followed by 1.0402.




Important Levels to Watch for:

-        Resistance line of 0.98879 and 0.99604.

-        Support line of 0.96533 and 0.95808.

Commentary/ Reason:

  1. The Swiss franc headed for its best week since March 2020, rising 2.86% against the dollar, and was last traded at 0.97294, near a 1-month high as risk-off sentiment in global markets strengthened demand for safer currencies.

  2. The Swiss franc also gained after Swiss National Bank president Thomas Jordan signaled on Wednesday the SNB was ready to act if inflation pressures continued. Central banks have been walking a tightrope, trying to regain control of decades-high inflation without causing painful recessions.

  3. The USD/CHF pair paving the way to head towards the next correctional level at 0. 96533. More decline is expected in the upcoming sessions and holding below 0. 9653 represents initial condition to continue the suggested negative scenario.




Important Levels to Watch for Today:

-        Resistance line of 129.560 and 130.142.

-        Support line of 127.675 and 127.092.

Commentary/ Reason:                                        

  1. The safe-haven yen slipped against the U.S. dollar.

  2. The greenback was last up 0.22% against the Japanese currency on Friday, trading at 128.072 yen, though headed for about 1.10%, its second-straight weekly losses.

  3. Growing worries about softening global economic growth continued weighing on investors' sentiment and triggered a fresh wave of a risk-aversion trade.

  4. Even with global stocks sliding this week amid risks to growth from aggressive monetary tightening - led by the Federal Reserve - and China's strict lockdowns to quash a COVID-19 outbreak, the dollar's appeal as a haven was eclipsed by a decline in U.S. yields as investors rushed for the safety of Treasury bonds.

  5. Japan's core CPI in April exceeded a central bank target of 2% for the first time in seven years, but only thanks to rising import costs, not the strong domestic demand that the central bank has been trying to kindle. The 2.1% rise in the core CPI announced on Friday reinforces market scepticism that the BoJ will maintain its ultra-loose monetary policy, especially since households are suffering rising costs without substantial wage growth.




Important Levels to Watch for:

-        Resistance line of 1.25472 and 1.26163.

-        Support line of 1.23235 and 1.22543.

Commentary/ Reason:

  1. Sterling advanced 0.17% to $1.24888 on Friday, and was headed for 1.69% gains for the week, its best showing since late 2020.

  2. After having outperformed the sterling on Wednesday, the greenback stays on the back foot on Thursday and Friday, allowing GBP/USD to stay afloat in positive territory. With U.S. Treasury bonds finding demand as safe haven in the current risk-averse market environment, the yield on the 10-year reference is falling 2% on the day and weighing on the dollar.

  3. Though traders remain anxious and speculated that the Bank of England will struggle to rein in inflation and avoid a recession. A data on the surge in U.K. inflation to a 40-year record fostered worries for a sharp economic slowdown. On top of that, the potential negative impact of the ongoing Russia-Ukraine conflict on the UK economy, renewed Brexit concerns also make it difficult for GBP/USD to go into a steady recovery in the near term.

  4. GBP/USD struggles to keep overnight’s stellar gains inside a rising wedge bearish formation, despite staying on the way to post the first weekly gains in five. As overbought RSI conditions backed the GBP/USD pair’s latest pullback inside the wedge, further weakness in prices can’t be ruled out.

  5. The GBP/USD weakness will aim for the 1. 2323 threshold before directing bears towards the stated bearish chart pattern’s support line around 1. 2254.

  6. Following that, 1.2547 and the monthly high close to 1.2616 could lure the GBP/USD bulls.