INTRADAY TECHNICAL ANALYSIS 23 MAY (observation as of 08:50 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 up 0.70% at $1.06293 on top of last week's 1.5% gain on the dollar.

  2. The Euro climbed in early trading on Monday after the ECB’s President Christine Lagarde announced that “July is the likely lift-off date for ECB rates”.

  3. Meanwhile for the dollar, a reduction in China’s lockdowns in Shanghai have taken away support for the greenback along with markets view on an exhaustive rally on the back of an aggressive Fed.

  4. However, Eurozone poor growth environment, as well as Russia/Ukraine war along with the proposed Russian oil embargo could aggravate the common currency.

  5. The EUR/USD pair opens positively to move away above support 1.0458, reinforcing the expectations of continuing the bullish trend, motivated by stochastic positivity that appears clearly now, and we believe that the way is open to achieve our waited target at 1.0640.

  6. Breaching the level will lead the price to achieve more bullish correction that its next target reaches around 1.0700. The expected rise will remain valid unless breaking 1. 04589 and holding below it.




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 dollar remains weighed against the Swiss franc, slipping 0.33% and hovering just above the more than 3-week low touched on Friday last week.

  2. The pair was last traded at 0.97139 on Monday as risk-off sentiment in global markets strengthened demand for safer currencies.

  3. The Swiss franc also gained after Swiss National Bank president Thomas Jordan signalled on Wednesday last week 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.

  4. 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 128.663 and 129.433.

-        Support line of 127.123 and 126.353.

Commentary/ Reason:                                        

  1. The dollar weakened 0.25% against the yen to 127.571 after initially gaining ground early in the session. It is still some distance from this year's high of 131.34, hit on May 9.

  2. USD/JPY on gave up an early advance and turned lower as a slump in stocks sparked safe-haven demand for the yen.

  3. Also, lower T-note yields on the day strengthened the yen and weighed on the greenback. 

  4. In addition, the yen garnered support after the Japanese government on Friday said that it would relax COVID-19 border restrictions from June 1 and double its daily cap of international arrivals to 20,000.

  5. The USD/JPY pair shows clear negative trades, moving within bearish channel that appears on the chart. Bearish bias will be suggested on the intraday basis and breaking 127.123 will ease the mission of achieving negative target to extend to 126. 353, taking into consideration that failing to break 127.123 may bounce the price to attempt to recover and regain the main bullish trend again.




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 leapt nearly 2% last week on the back of stronger-than-expected retail data and markets' broader rethink of whether global central banks are really lagging much behind the U.S. Fed. It was last up 0.50% at $1.25540 on Monday, not far from breaching the 1-month high.

  2. The dollar stays on the back foot on the opening week, 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. 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.