INTRADAY TECHNICAL ANALYSIS 17 SEPTEMBER (observation as of 05:00 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.18224 and 1.18497.
- Support line of 1.17339 and 1.17065.
Commentary/ Reason:
The euro hit a three-week low of $1.17505 overnight and last traded at $1.17715.
The euro rose slightly on the day, but still meandering around yesterday’s low, as the riskier currency continued to be hit by the strengthening greenback following strong U.S. core retail sales and jobless claims data for August 2021, which pushed the T-note yields higher and was hawkish for Fed QE tapering.
The euro also weighted on the dovish ECB comments on Thursday. ECB Governing Council member Rehn said monetary policy is needed "to maintain favourable financing conditions for a sufficiently long period for the economy to continue its recovery and to offset the negative impact of the pandemic on inflation."
Support awaits at 1.1733, which was a swing high in mid-August. It is followed by 1.1706.
While resistance is at 1.1822, the zone which has kept the currency pair down throughout the week. The next level is at 1.1849.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.93039 and 0.93390.
- Support line of 0.91901 and 0.91550.
Commentary/ Reason:
The dollar’s strength was pronounced against the safe-haven Swiss franc, rose to hit a five-week high earlier today, on top of 0.86% jump on Thursday.
The dollar however pared its earlier gains to stood slightly lower, last at 0.92659 to the franc.
The Swiss franc extended its losses against the U.S. dollar at the opening today as the less risky currency continued to be hit by the strengthening greenback following strong economic data from the world’s largest economy.
Both U.S. core retail sales and jobless claims data for August 2021 surprised the market and continued to lift the greenback’s performance, on the likely of tempering expectations for a sharp slowdown in economic growth in the Q3.
The FOMC’s 2-day policy meeting is due to be held on Sept. 21-22 and could provide clues as to when the U.S. central bank will start withdrawing its asset purchases. Reduced central bank stimulus tends to lift bond yields, which also helps boost the dollar.
The Swiss franc meanwhile still holds some ground on its safe-haven appeal amid risk aversion on the rapid spread of the Delta variant of the coronavirus and its impact on global economic recovery.
The USD/CHF has broken back above the previous resistance line, as strong bullish momentum has begun to drive the rally. Conviction will now be tested after the break, and it remains to be seen whether it can be sustained. However, the breakout of the consolidation range is significant.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.38571 and 1.38903.
- Support line of 1.37496 and 1.37163.
Commentary/ Reason:
Sterling rose against the dollar on Friday, at $1.38027, after bouncing back from its 1-week low recorded yesterday.
The GBP/USD pair has stalled at the mid-range of the 1.371-1.390 trading range. Oscillations within range have narrowed with tighter price action suggesting that a breakout may be on the cards.
On the upside, GBP/USD needs to settle above the resistance at 1.385 to have a chance to gain upside momentum in the near term. The next resistance level is located at 1.389.
On the other hand, for the support is located near 1.374, followed at 1.371.
Later today, traders will take cues from the UK macro releases of Retail Sales.
The dollar bullish mood also faces another test later on Friday with the release of University of Michigan’s consumer sentiment index, which surprised many investors last month by tumbling to a decade-low due to smaller income gains and higher inflation.
