INTRADAY TECHNICAL ANALYSIS 14 JULY (observation as of 05:45 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.18713 and 1.19115.
- Support line of 1.17414 and 1.17013.
Commentary/ Reason:
The euro rose 0.08% to $1.17850, bounced slightly after it touched a 3-month low against the dollar earlier today.
The U.S. dollar soared after heated U.S. inflation spurred bets of faster monetary policy tightening by the Fed. Markets have sided on the hawkish interpretation, bringing forward rate hike expectations to late 2022, and leading to "broad-based gains" for the dollar.
Carry-over weakness from Monday also weighed on the euro when ECB President Lagarde signaled that the ECB might begin new stimulus measures next year after its current emergency bond program ends. ECB President Lagarde said on Monday that the July 22 ECB meeting will have "some interesting variations and changes" and that the ECB's emergency stimulus that will end in March 2022 could "transition into a new format."
The rapid drop is deeply oversold but with no signs of stabilization just yet, EUR could weaken to the next support at 1.1741. For today, a sustained decline below this level is unlikely (next support is at 1.170). On the upside, a breach of resistance level would indicate that the current weakness has stabilized.
Traders are now looking ahead to Fed Chair Jerome Powell testifying before Congress on Wednesday and Thursday for any signals on the timing of a tapering of stimulus and higher interest rates.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92150 and 0.92397.
- Support line of 0.91353 and 0.91107.
Commentary/ Reason:
The dollar was little changed at 0.91821 per franc.
The price of USD/CHF is stalling and has moved into a shorter-term sideways channel which raises prospects of a significant upside correction.
The dollar for now is expected to remain supported by expectations that the Fed is all set to tighten its monetary policy stance sooner than anticipated. This was reinforced by Tuesday's hotter-than-expected US CPI figures, which showed that the headline CPI accelerated.
However, worries about the economic fallout from the spread of the highly contagious Delta variant of the coronavirus underpinned the safe-haven Swiss franc. Which in turn, kept a lid on any further gains for the USD/CHF pair.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.39018 and 1.39427.
- Support line of 1.37695 and 1.37287.
Commentary/ Reason:
Sterling inched up 0.17% to $1.38244 on Wednesday.
The pound is holding despite nerves about England abandoning COVID-19 restrictions next week as cases keep on climbing. Boris Johnson’s decision to ease remaining coronavirus restrictions in England is prompting growing fear and calls for caution, fueling worries that a surge in infections will strain hospitals and undermine Britain’s economic recovery.
The GBP/USD pair has an increased bearish potential in the near-term. A break is yet to materialize and therefore the pair may continue to consolidate in range.
Investors now await as the UK is set to publish June inflation data on Wednesday, apart from Fed Chairman Jerome Powell's testimony before Congress on Wednesday and Thursday.
