INTRADAY TECHNICAL ANALYSIS 5 AUGUST (observation as of 05:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.18984 and 1.19246.
- Support line of 1.18134 and 1.17872.
Commentary/ Reason:
The euro was down at $1.18342, having withdrawn from a top of $1.1899 overnight and marking another failure to crack resistance of $1.190.
The dollar pushed to a 1-week high against the euro on Thursday as hawkish comments from the U.S. Federal Reserve led markets to bring forward the likely timing of a policy tightening there, while action in Europe and Japan remain distant prospects. The rally came after Fed Vice Chair Richard Clarida said conditions for an interest rate hike could be met in late 2022, setting the stage for a move in early 2023.
Adding to the murkiness were Wednesday's mixed data where a surprisingly weak ADP report on private hiring clashed with the strongest ever reading for U.S. services.
Clouding the outlook further is the spread of COVID-19 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 dollar appreciated across the FX board. The EURUSD pair moving inside the intraday bearish channel that appears on the chart, which supports the chances of achieving more expected decline in the upcoming sessions, and we expect to visit 1.181 price level. Noting that breaching 1.189 will stop the expected decline on short term basis.
Technical indicators hold within negative levels, paring losses but without signs of bearish exhaustion.
On Thursday, the calendar will include Germany factory orders, foreseen up by 1.9%, and U.S. initial jobless claims for the week ended July 30.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90906 and 0.91147.
- Support line of 0.90126 and 0.89885.
Commentary/ Reason:
The dollar rose to a 1-week high against the Swiss franc, traded at 0.90717 on Thursday.
A hawkish remark by the Fed official of rates tightening helped pushed the dollar higher, apparently shifting their focus away from the disappointing ADP payroll report.
The Swiss franc meanwhile holding on as a safe haven currency, as nerves about the spread of the Delta coronavirus variant keep a degree of caution in currency markets prompted traders to wind back bets on a strong economic recovery.
The USDCHF pair rallied upwards strongly, which stops the recently suggested negative scenario and lead the price to turn to rise, on its way to visit 0.909 resistance price level mainly.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.39566 and 1.39857.
- Support line of 1.38627 and 1.38337.
Commentary/ Reason:
The British pound gains 0.05% on Thursday to $1.38596.
Attention there now turns to a Bank of England meeting later today, with focus on policymakers economic projections and on what they say that means for rates.
The BoE is much nearer to tapering and could expand on timing at a policy meeting. BoE is expected to keep its benchmark interest rate and its bond-buying target unchanged Thursday.
The outlook of rates tapering helped the pound rally early in the year, though it has gone largely sideways on the last couple of months. It was last pinned near support at $1.386, having repeatedly failed to clear resistance above $1.398.
The GBP/USD pair will make another attempt at the 1.395 price level after a recent pullback. The price level represents the upper bound of a recent trading range and a break would indicate significant bullish conviction.
Sterling also has found momentum from an encouraging end to COVID-19 restrictions in the England, which has so far seemed not to cause a spike in virus deaths.
