INTRADAY TECHNICAL ANALYSIS 6 AUGUST (observation as of 04:40 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.18699 and 1.192012.
- Support line of 1.18073 and 1.17760.
Commentary/ Reason:
The euro is on track to lost about 0.3% on the dollar this week and was last drifting lower at $1.18238 on Friday.
A slump in German bund yields on Thursday weighed on EUR/USD after the 10-year German bund yield dropped to a 6-month low. Although contained by signs of strength in the Eurozone economy after German June factory orders rose stronger than expectations.
The dollar meanwhile was supported on Friday in the lead up to the release of U.S. employment data, as markets braced for the numbers that could make the case for faster U.S. policy tightening at a time when action in the Europe remains distant.
Also clouding the outlook further is the spread of COVID-19 Delta variant. In the U.S., daily new COVID-19 cases have climbed to a 6-month high, with more than 100,000 infections reported nationwide.
EUR/USD sellers have returned after a period of uncertainty and as such, price action has now broken the 1.186 resistance line. A recent price low exists at the 1.180 and 1.177 support lines which came as the end of a significant sell-off. The next few trading sessions will determine sellers’ conviction. Momentum indicators are neutral/bearish.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90959 and 0.91278.
- Support line of 0.90321 and 0.90002.
Commentary/ Reason:
The dollar rose to a 1-week hight against the Swiss franc, traded at 0.90803 on Friday.
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, while today waits for the nonfarm 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 USD/CHF 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 1.39637 and 1.39940.
- Support line of 1.38662 and 1.38360.
Commentary/ Reason:
The pound held an advance after the Bank of England signalled concerns about inflation. It now retreated 0.05% against the dollar to $1.39192.
The BoE left policy settings untouched but outlined a path to tapering and tightening over years to come. Investors continued to price in a first 15 basis-point rise in Bank Rate in about a year's time.
The GBP/USD pair rose as high as $1.394 after the BoE decision but has once again been rejected below the 1.396 price level, as selling pressure begins to rise when any break attempt is made. Bearish sentiment will likely result in the containment of price action within the current range between 1.386 and 1.395 price levels. Momentum indicators are neutral/bullish.
The current trajectory will be depending on the outcome of Friday's U.S. nonfarm payrolls event. In respect of this, there is potential for a disappointment in contrast to the current hawkish narrative from the Federal Reserve.
