INTRADAY TECHNICAL ANALYSIS 16 JUNE (observation as of 05:00 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.21534 and 1.21719.
- Support line of 1.20937 and 1.20753.
Commentary/ Reason:
The euro was holding at $1.21278 against the dollar, trading rangebound.
The pair rose slightly on strength in German bund yields, although strength in T-note yields also supported gains in the dollar.
EUR/USD struggling to recover from its fall last week after the ECB pledged to keep stimulus steady over the summer.
On the trade front, the head of the European Commission announced that the bloc and the U.S. had resolved a 17-year dispute over aircraft subsidies.
The FOMC policy meeting outcome is now awaited, as investors tried to ascertain if the Fed might alter the language on its stimulus following a recent jump in U.S. inflation.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90142 and 0.90328.
- Support line of 0.89539 and 0.89352.
Commentary/ Reason:
The dollar edged higher against the Swiss franc on Wednesday, added 0.11% to trade at 0.89857.
The U.S. currency has been buoyed as traders closed short positions before the Fed’s two-day policy-setting confab, which ends today.
Whilst no immediate changes in monetary policy are anticipated, an increase in the share of FOMC members who think rates will need to increase in 2023 is expected. The U.S. central bank is expected to acknowledge the first conversations among its policymakers on when and how fast to pare back the massive bond-buying program launched in 2020 at its policy meeting later in the day.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.41403 and 1.41773.
- Support line of 1.40204 and 1.39833.
Commentary/ Reason:
The British pound bounced back from a 1-month low of $1.40341 on Tuesday, to last stood at $1.40886 on Wednesday.
The UK job recovery looks set to continue following the country’s stronger-than-expected employment data Tuesday that surged by a record amount. Though the rapid spread of the highly contagious Delta variant of the novel coronavirus, which forced Prime Minister Boris Johnson to delay his plans to lift lockdown, is seen as a risk.
A deterioration of relations between the EU and the UK meanwhile weighted on the pound sterling. Both accusing the other of acting in bad faith over part of their Brexit divorce deal that covers border issues with Northern Ireland.
Meanwhile, the dollar appears to be holding up quite well, supported by the strength in T-note yields today.
GBP/USD could drop if the Fed meeting reveals a hawkish shift in monetary policy guidance. Markets will likely pay close attention to the updated Fed dot plot and language changed in the press statement.
