INTRADAY TECHNICAL ANALYSIS AUGUST 16 (observation as of 07:30 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.02645 and 1.03080.

-        Support line of 1.01240 and 1.00806.

Commentary/ Reason:

  1. The euro was little changed at $1.01636 after earlier dipping to the weakest since Aug. 5 at 1.01474.

  2. The common currency is trading close to parity since early July, as there are increasing signs the Eurozone economy is heading into a recession, at a time inflation continues to break record highs, the energy crisis is far from over, and the ECB is set to continue to increase borrowing costs, as well as weighed down by Europe's struggles with the war in Ukraine.

  3. Eurozone government bond yields fell as investors concerned about possible recession and amid persistent fears of production cuts in Germany due to potential gas rationing.

  4. Meanwhile the greenback edged higher as traders continued to weigh data that has raised the possibility that U.S. inflation may be peaking against Federal Reserve policymakers' hawkish comments.

  5. The EUR/USD pair expected to extend the bearish wave on the intraday and short-term basis, opening the way to head towards 1.0124 as the next target.

  6. The EMA50 continues to press negatively on the price to support the expectations of continuing the bearish trend, taking into consideration that breaching 1.0264 represents initial key to start recovery attempts.

EURUSD

              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.95475 and 0.96053.

-        Support line of 0.93605 and 0.93027.

Commentary/ Reason:

  1. The dollar added 0.20% at 0.94681 franc on Tuesday, rose of second consecutive day to try to distance itself from the 3-month low touched last week.

  2. The dollar was supported on the day as market remain risk averse. The global safety bid was driven by a raft of weak world economic indicators.

  3. Though it still struggles to regain inflation-induced losses, after the U.S. inflation data last week sending the dollar tumbling. Fed officials eased market expectations for a substantial relaxation of its tightening policy, and investors were cautious about expectations for a sharp weakening of the dollar in the market outlook.

  4. The USD/CHF pair reinforcing the expectations of continuing the bullish trend, which its next main target located at 0.9547.

  5. Stochastic current negativity might cause some temporary sideways fluctuation before resuming the expected rise, which will remain valid conditioned by the price stability above 0.9360.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 135.420 and 136.671.

-        Support line of 131.372 and 130.121.

Commentary/ Reason:                                        

  1. Against the yen, a much sought-after haven currency, the dollar rose 0.20% to 133.691 yen.

  2. The Japanese yen traded lower against the U.S. dollar, as poor Chinese economic data weighed on the currency. The U.S. Treasury yields meanwhile trade sluggishly, offering little impetus to bulls, as investors also remain wary about the latest unexpected rate cuts by the PBOC.

  3. The pair remains volatile within a familiar trading range, as performance across the equity markets keep a lid on any further gains for the safe-havens.

  4. The USD/JPY pair attempted to break 131.372 but it kept its stability above it, to keep the bullish trend active, and it needs to surpass the EMA50 that forms resistance now to head towards our waited positive target at 135.420. the continuation of the expected bullish wave requires holding above 131.372.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.21823 and 1.22793.

-        Support line of 1.19883 and 1.18913.

Commentary/ Reason:

  1. Sterling was 0.33% down at $1.20128, the lowest since Aug. 5.

  2. The dollar remains as favourite amid flight to safety as dollar bulls tracked the rebound in the U.S. Treasury yields across the curve.

  3. UK political uncertainty continues to remain a drag on the pound, despite the less-than-expected contraction of the Q2 GDP.

  4. Traders await as more key economic data for the UK to be released this week. The ONS will publish inflation, unemployment and retail sales figures which will provide further updates on the labour market recovery and price pressures, offering further clues on the size of BoE rate hike in September, while the Fed July meeting’s minutes could steal the limelight on Wednesday.

  5. The GBP/USD pair expected to continue the decline on the intraday and short-term basis, to break 1.1988 and extend to 1.1819. Bearish bias will be suggested for the upcoming period unless the price rallied to breach 1.2182 and hold above it.

GBPUSD