INTRADAY TECHNICAL ANALYSIS 21 JULY (observation as of 05:50 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.18092 and 1.18277.
- Support line of 1.17492 and 1.17307.
Commentary/ Reason:
The euro rebounded slightly off 3-month trough of $1.17556 overnight, to trade at $1.17731 on Wednesday.
The greenback continued to strengthen due to its safe-haven reputation as it is natural for investors to prefer holding dollars rather than buying stocks in times of uncertainty.
The dollar took a breather from its peaks on Wednesday, as a bout of risk-aversion ebbed, though selling was light as expectations of a cautious ECB had the euro pinned down.
Traders are awaited ahead to the ECB meeting tomorrow.
A dovish tone is expected after President Christine Lagarde foreshadowed a guidance tweak during an interview last week. No change in the ECB bias is unlikely to be enough to send the euro higher, while any shift towards the dovish interpretation of the strategic review would underscore the recent downward EUR/USD trend.
EUR/USD bears are dominating the direction of price action despite a rise in buying pressure in the last few trading sessions. A target price level exists at the 1.174 support line, which is a recent low for the pair. Momentum indicators have flattened in bearish territory.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92448 and 0.92700.
- Support line of 0.91632 and 0.91380.
Commentary/ Reason:
The dollar slipped off its weekly high recorded yesterday, though still buoyant at 0.91133 per franc on Wednesday.
A modest recovery in the global equity markets undermined the safe-haven Swiss franc and was seen as a key factor that extended some support to the USD/CHF pair.
While the sign of lingering fears of the spread of the Delta variant extends some support to the safe-haven Swiss franc.
Without any major market-moving economic data due for release today, the USD/CHF pair at the mercy of the broader market risk sentiment. Traders also might take cues from the U.S. bond yields, which should influence the dollar price dynamics and produce some short-term trading opportunities around the major.
A downside break of 0.916 support becomes necessary for the bears to refresh the monthly low under 0.9100. Meanwhile, a clear upside will be probed by the wedge’s resistance line near 0.924 and the monthly high surrounding 0.927.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.37042 and 1.37497.
- Support line of 1.35571 and 1.35117.
Commentary/ Reason:
Sterling was last at $1.36079 on Wednesday, consolidating losses around Tuesday's 5-month low of $1.35718.
Sterling has faced pressure as COVID-19 cases soar with England lifting most social restrictions, trusting that vaccines will prevent hospitals from being overwhelmed.
Risk aversion and expectations that U.S. economic strength could prompt interest rates to rise meanwhile drove the dollar higher.
Intraday bias in GBP/USD remains on the downside at this point. The GBP/USD pair has broken several earlier support levels price line. This indicates significant bearish sentiment, considering this support area has been an obstacle for sellers in the past.
The GBP/USD bears are catching a breather but not out of the woods, as the break appears to have inspired the return of buyers.
