INTRADAY TECHNICAL ANALYSIS 25 JULY (observation as of 08:20 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.02636 and 1.03857.

-        Support line of 1.00194 and 0.98973.

Commentary/ Reason:

  1. The euro was down slightly against the dollar, trading at $1.02030 on Monday, struggling to extend the renewed upside as investors assess global recession risks ahead of the all-important Fed rate hike decision this week.

  2. Market reaction will turn on how hawkish Fed sounds with his determination to reduce inflation in the face of slowing growth. The Fed concludes a two-day meeting on Wednesday and markets are priced for a 75-bps rate hike.

  3. Markets also digest the latest comments from ECB President Christine Lagarde, as she said that the central bank will raise its interest rates until inflation falls back to its 2% target.

  4. An energy crisis also hangs over the euro. Uncertainty about a potential energy supply crunch in the eurozone kept gains capped.

  5. The EUR/USD pair is still in a bullish bias, targeting visiting 1.0263 as a first positive station, noting that surpassing the mentioned target will push the price to 1.0385 as a next target. Bullish trend will be expected for today conditioned by the price stability above 1.00.

  6. The immediate focus now shifts towards the German IFO Economic Sentiment data due for release later this Monday. This sentiment data will be key to watch after Friday’s Eurozone and German Preliminary S&P Global business PMIs showed contraction in July, reviving fears over an imminent recession in the bloc. The Italian political turmoil will also likely remain a risk to the shared currency.

EURUSD

              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.97010 and 0.97407.

-        Support line of 0.95723 and 0.95325.

Commentary/ Reason:

  1. The dollar rose 0.40% to buy 0.96502 Swiss francs.

  2. The pair has remained in the grip of bears for the past week and is expected to slide further as the Fed is expected to stick to a 75-bps rate hike.

  3. Apart from Fed policy and U.S. Durable Goods on Wednesday, Swiss Retail Sales will be of utmost importance. The economic catalyst is expected to remain higher as soaring energy bills and prices of food products will elevate the Retail Sales. However, a slippage in the economic data will indicate a major slump in the overall demand. This may weaken the Swiss franc bulls ahead.

  4. The USD/CHF pair attempts to break 0.9572 level, reinforcing the expectations of continuing the bearish trend on the intraday and short-term basis, waiting to head towards 0.9532 that represents our next negative target.

  5. The EMA50 supports the expected decline, which will remain valid unless the price rallied to breach 0.9701 and hold above it.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 138.000 and 138.911.

-        Support line of 135.051 and 134.149.

Commentary/ Reason:                                        

  1. The greenback added 0.22% to 136.368 yen on Monday, after weakening sharply late last week.

  2. The Fed concludes a two-day meeting on Wednesday and markets are priced for a 75-bp rate hike, with about a 9% chance of a 100 bp hike. That left the BoJ among the few remaining central banks keeping its money tap wide open. Kuroda last week reiterated his resolve to keep interest rates ultra-low, after the BoJ's widely expected decision to maintain an extremely loose monetary policy.

  3. The Bank of Japan on Monday announced that it has reshuffled its board and brought in a new member seen as keener to end ultra-low interest rates than his dovish predecessor, potentially tilting the board away from Governor Haruhiko Kuroda's aggressive monetary easing policy.

  4. The USD/JPY pair supports the continuation of the bearish correction domination in the upcoming period, paving the way to head towards 135.051 followed by 134.149 levels as next negative stations.

  5. Bearish trend on the intraday basis continues to be suggested, taking into consideration that stepping above 138.00 and holding above it will lead the price to start recovery attempts and regain the main bullish trend again.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.20550 and 1.21203.

-        Support line of 1.18437 and 1.17783.

Commentary/ Reason:

  1. Sterling is marginally changed on Monday, traded to $1.20025.

  2. The pair holds its ground, as markets reckon on a 60% chance the Bank of England would lift rates by 50-bps by next week.

  3. The GBP/USD pair provided clear positive trades in the previous sessions to approach our waited target at 1.2055, before returns to fluctuate near the EMA50, waiting to resume the bullish wave that its targets extend to 1.2120 after surpassing the previous level.

  4. Bullish trend is continue to be suggested for the upcoming period unless breaking 1.1843 and holding below it.

  5. The focus this week remains the Fed rate hike decision. Ahead of that, traders will look forward to the UK political news and the US Durable Goods Orders data for fresh trading impetus.

GBPUSD