INTRADAY TECHNICAL ANALYSIS AUGUST 17 (observation as of 06:50 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 steady at $1.01717 after squeezing out small gains. The euro Wednesday rebounded from a 2-1/2 week low recorded overnight and posted modest gains.

  2. Dollar weakness sparked short covering in EUR/USD. The euro traded slightly higher against the U.S. dollar, as demand for the greenback paused overnight, following a mixed US stock market.

  3. Though gains in the euro were capped by better U.S. data, where data on building permits in the U.S. came higher than expected.  The real estate market in the U.S. was more heated than expected, which could generate inflation in the short and medium term.

  4. Also, concerns that an energy crisis could send the EU into recession are undercutting the euro after European nat-gas prices Tuesday rallied to a 5-1/2 month high. Energy prices in Europe have been soaring after Russia cut gas supplies to Europe, slamming the region’s economy.

  5. 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.

  6. The EUR/USD pair shows positive trades, to head towards potential test to 1.0264 level, though noticing that stochastic loses its positive momentum, waiting to motivate the price to resume the bearish wave that its next target extends to reach 1.0124. Bearish trend is suggested for the upcoming period unless breaching 1.0264 level and holding above it.

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 0.15% at 0.95071 franc on Wednesday, gained for third consecutive day to try to distance itself from the 3-month low recorded Thursday.

  2. The dollar climbs, as market remain risk averse. Higher T-note yields were also supportive of the dollar.

  3. The USD/CHF pair provided more bullish bias to approach our waited target at 0.9547 and breaching it will lead the price to achieve additional gains that reach 0.9605.

  4. Bullish trend scenario still active, taking into consideration that breaking 0.9360 will stop the suggested rise and press on the price to decline towards 0.9302.

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. The dollar was traded to 134.490 yen, firming 0.20% higher the much sought-after haven currency.

  2. The greenback bounced off weekly lows, underpinned by high U.S. bond yields.

  3. The interest rate differential in the U.S. continues to favour the greenback over the yen, but if it appears that the Federal Reserve will have to be a little bit looser with its monetary policy than once anticipated, that could put downward pressure on this market.

  4. Generally, lower interest rates tend to favour the Japanese yen, which is what we are seeing as of late. In other words, the old correlations remain, and it makes a certain amount of sense that we would see this play out in the same way.

  5. The USD/JPY pair found solid resistance, to show some temporary bearish bias, affected by stochastic negativity. The pair waiting to resume the bullish bias to surpass the mentioned level and open the way to head towards 135.420 as a next positive station.

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 last fetching $1.21098, picks up bids to extend the previous day’s recovery during Wednesday’s session.

  2. The UK labour data published on Tuesday gave bid to the British pound.

  3. The risk of stagflation is rising for the UK. The latest UK jobs report showed labour market that is slowing down, while incoming UK inflation figures later today are expected to press even higher. For the time being, the BoE remains committed to snuffing out price pressures, meaning growth is likely to sag even further.

  4. For the time being, rates markets are now their most aggressive they’ve been all year in terms of BoE hike odds.

  5. Fed July meeting’s minutes meanwhile could steal the limelight too later today.

  6. The dollar tries to hold on and remains as favourite as dollar bulls tracked the rebound in the U.S. Treasury yields across the curve.

  7. The GBP/USD pair rebound upwards strongly and approaches testing key resistance now at 1.2182, to face contradiction between the technical factors that makes us prefer to stay aside until we get clearer signal for the next trend.

  8. Continuation of the bullish bias and breaching the mentioned resistance will push the price back to extend to 1.2279, while breaking 1.1988 support line represents negative factor that will press on the price to decline towards 1.1891 areas.

GBPUSD