INTRADAY TECHNICAL ANALYSIS 23 JUNE (observation as of 04:45 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.19681 and 1.19963.
- Support line of 1.18770 and 1.18489.
Commentary/ Reason:
The euro traded 0.13% lower at $1.19214 against the dollar on Wednesday, although rebounding from as low as $1.18474 at the end of last week.
The greenback shook off early losses and advanced moderately on strength in T-note yields today, which strengthens the dollar’s interest rate differentials.
Although it remained on the back foot after 2-day consecutive losses against the euro as U.S. Fed officials including Chair Jerome Powell reaffirmed that tighter monetary policy was still some way off. Overnight, both Powell and New York Fed President John Williams warned that the economic recovery requires more time before a tapering of stimulus and higher borrowing costs are appropriate.
Meanwhile a report from Reuters on Tuesday was negative for EUR/USD when they reported that three sources close to the matter said that ECB policymakers are far apart on a new inflation strategy, and they may tolerate inflation above 2% as part of its upcoming strategy review. The sources said that the ECB would continue the debate and hope to find a general consensus before the Sep 9 ECB meeting.
The EUR/USD may consolidate for a period within a transitory trading range between the 1.184 and 1.199 price levels. Sellers appear active in early trading after a rally attempt was made in yesterday’s session. Momentum indicators suggest a bullish reversal is underway.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92163 and 0.92330.
- Support line of 0.91624 and 0.91458.
Commentary/ Reason:
The dollar traded higher against the Swiss franc on Wednesday. At the time of writing, the pair is trading at 0.91959, added 0.24%.
The dollar was higher after alternating between losses and gains in the several recent session as investors digested elevated U.S. inflation following the FOMC outcome last week, with the dollar appears to be holding up quite well, supported by the strength in T-note yields today.
The dynamics around the U.S. dollar expected to continue to influence the pair’s performance for the time being.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.39892 and 1.40297.
- Support line of 1.38582 and 1.38177.
Commentary/ Reason:
Sterling pulled back, unable to hold to on to its last two consecutive days gains. The pair bought at $1.39312, retreated 0.1%
The pound opened higher against the U.S. dollar today as the greenback retreated amid a recovery in risky assets. Traders appeared to lean on the side of inflation that is likely to be transitory, implying hope that U.S. monetary normalization may not happen too soon.
British economy reopening plan, PMI figures and BoE policy decision are watched by most traders this week.
The Prime Minister Boris Johnson said England is on course to be able to lift coronavirus restrictions as planned on July 19, despite the spread of the delta variant.
While the BoE may be forced to act next due to inflation data. Britain’s top central bank officials look set to remain divided this week over whether to pull the plug on their 875 billion-pound ($1.2 trillion) government bond purchase programme, after inflation hit its highest in nearly two years.
The GBP/USD pair has rebounded from the 1.38 support level as buyers have returned with strength in yesterday’s trading. Sellers are still active, however, which suggest that the pair may consolidate within the current range in the near-term.
