INTRADAY TECHNICAL ANALYSIS 17 MAY (observation as of 06:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.21865 and 1.22097.
- Support line of 1.21115 and 1.20883.
Commentary/ Reason:
The euro slipped 0.15% to $1.21271 against the dollar.
The dollar regains footing as yield bounced. A dollar bounce that followed higher-than-expected inflation data last week has also faded as traders figure the Fed will keep rates low.
The EUR/USD meanwhile continues to trace the ascending trendline higher, as buyers appear to be dominating price action. Another test of the 1.218 price level will, once again, test buyers’ conviction. Momentum indicators have stalled in bullish territory.
Fed minutes, from an April meeting that predated the data surprise on inflation last week, are due on Wednesday and are the next market focus for clues on the Fed’s thinking.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90535 and 0.90711.
- Support line of 0.89965 and 0.89789.
Commentary/ Reason:
The dollar traded higher against the Swiss franc on Monday, rose 0.11% to trade at 0.90214.
Although traded higher, the dollar was weighted by the inflation worries, lower U.S. Treasury yields and expectations of reduction in the Fed’s stimulus.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.41309 and 1.41458.
- Support line of 1.40711 and 1.40562.
Commentary/ Reason:
Sterling traded higher on Monday, at $1.40930, as Britain reopens its economy after a 4-month COVID lockdown.
The UK ministers will decide on June 14 about whether or not to proceed with the final phase of lockdown easing in England, health minister Matt Hancock said on Sunday, describing the pandemic as "under control".
On Friday last week, the Prime Minister Boris Johnson announced that Britain would accelerate its COVID-19 vaccination programme to try to contain a fast-spreading variant first identified in India, warning that Britain's reopening could be knocked off track by the Indian variant.
The U.S. dollar is expected to resume its downtrend this week now that the market has digested last week’s high inflation reading for April and as the U.S. Federal Reserve keeps rates low.
The GBP/USD pair has tested the 1.413 resistance level on several occasions and yet price action is continuing to climb, with higher lows. A breakout seems imminent although bullish conviction currently remains low. Momentum indicators are bullish with further upside potential.
