INTRADAY TECHNICAL ANALYSIS 3 AUGUST (observation as of 05:45 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.19005 and 1.19157.
- Support line of 1.18510 and 1.18357.
Commentary/ Reason:
The euro traded at $1.18773 on Tuesday, rose slightly, although subdued having lost a bit of momentum after hitting a 1-month high of $1.19082 on Friday.
The pair moved slightly higher on Eurozone economic optimism. The Eurozone July manufacturing PMI was revised upward to 62.8 from the previous 62.6, while the German June retail sales rose stronger than expectations.
The gains however were limited after the 10-year German bund yield fell to a 6-month low of -0.487%. The U.S. yield meanwhile also dropped on the ISM report showing July U.S. manufacturing growth slowed for the second straight month.
Clouding the outlook further is the spread of Delta variant. The 7-day average of daily coronavirus cases in the U.S. surpassed the peak seen last summer, a time before COVID-19 vaccine approved.
The EUR/USD has stalled under the 1.190 resistance area. The pair will likely float sideways and a change in price action will be facilitated by a change in fundamental factors.
There won’t be relevant data to take care of on Tuesday, with investors waiting for US-employment related figures later in the week. The EU will release the June PPI, while the US will unveil June factory orders.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90730 and 0.90869.
- Support line of 0.90280 and 0.90141.
Commentary/ Reason:
Against the Swiss franc, the dollar traded at 0.90531 franc, little moved on the day, hovered above 1-1/2-month low of 0.90367 touched in the previous session.
The dollar was on the back foot against the Swiss franc on Tuesday following the soft U.S. manufacturing data and rising concerns about the coronavirus Delta variant prompted traders to wind back bets on a strong economic recovery.
The greenback remained sideways as traders waited for more economic data releases this week, especially the labour data on Friday. The USD/CHF is accumulating on the downside, testing the 0.902 support level where the sell-off has begun to wane. Given the weakening bearish sentiment, a rebound may be on the cards.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.39355 and 1.39580.
- Support line of 1.38625 and 1.38400.
Commentary/ Reason:
The sterling gains 0.13% on Tuesday to $1.38945 but slipped off Friday's 1-month high of $1.39831.
While the UK Manufacturing PMI improved to 60.4 in July as anticipated, tensions related to the Northern Ireland Protocol undermine the pound’s demand. The EU has paused its legal action against the UK for alleged breaches of the Northern Ireland Protocol last week but refused to review the Protocol that the UK wants to change.
The GBP/USD pair is pulling back. Selling pressure indicates there is a bearish bias in the pair yet conviction remains low. Chances of a bearish continuation will likely increase on a break below 1.386, the immediate support level.
