INTRADAY TECHNICAL ANALYSIS 5 OCTOBER (observation as of 06:10 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.16934 and 1.17321.
- Support line of 1.15679 and 1.15292.
Commentary/ Reason:
The euro fell 0.20% to $1.15949, slipped back to hover above the last week’s trough at $1.15625.
The troubles of China's construction giant are back on the agenda, weighing on sentiment and boosting the safe-haven dollar.
However, capping on the dollar gains is the pressure from political uncertainty with the continued lack of cooperation among U.S. lawmakers to raise the debt ceiling.
The EUR/USD recovery bullish momentum appears too weak to support a rally attempt, staged a "dead-cat bounce" after tumbling down last week. A break towards a previous trading range is likely to be contained by the descending trendline. Some support awaits at the fresh 2021 trough of 1.156. Further down, 1.1529 is on the radar. The first upside level to watch is 1.169, the early August cushion, followed at the next level at 1.1732.
The U.S. nonfarm payrolls report later this week is awaited, in assessing the gap between the U.S. and Europe on inflation. The ECB has been sticking to its stance that price rises are transitory, despite an increase in underlying prices. The Core PCE hit 1.9% in September in the eurozone. It stands at 4% in the U.S., a substantial gap that explains the divide in rhetoric.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.93506 and 0.93811.
- Support line of 0.92518 and 0.92213.
Commentary/ Reason:
The dollar rose 0.26% against the Swiss franc, at 0.92688, bounced from the 1-week low recorded on Monday.
While the renewed China’s Evergrande fears, inflation concerns, and the U.S.-China political tension favours safe-haven Swiss franc, the greenback on Tuesday found firmer buying support ahead of the U.S. jobs data report later this week.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 111.779 and 112.121.
- Support line of 111.573 and 110.200.
Commentary/ Reason:
The dollar traded at 111.222 yen on Tuesday, stronger than yesterday.
The pair has been moving higher in tandem with 10-year yields on a reaction to the last Fed statement on September 22. Jerome Powell stated that the employment target had been ‘all but met’ and that he expected tapering to be done by the middle of next year.
The statement about inflation being transitory was also dropped, which has given the market the impression that the Fed is moving towards a more hawkish stance. This is what has been supporting the USD/JPY as the greenback gains on a more hawkish Fed outlook.
The USD/JPY pair has stalled above the 110.573 support level, still didn’t breach the support zone. Buyers have returned in early trading and the pair may now oscillate between the 110.66 and 11.50 price levels.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.36912 and 1.37665.
- Support line of 1.34475 and 1.33722.
Commentary/ Reason:
Sterling held near a 1-week high of $1.36395 recorded overnight, and last changing hands at $1.35913 on Tuesday.
The GBP/USD in its recent trading has mainly been holding onto its recovery. The renewed Brexit concerns, fuel supply issues and a broad rebound in the U.S. dollar however are weighing negatively on the cable, as investors digest the latest China Evergrande story.
On the monetary policy front, cable is balanced – with both the Federal Reserve and the Bank of England are set to tighten their policies.
If the currency pair surges, it would have to pass the resistance of the 1.369 zone and above these resistance level, the pair could find the next resistance at 1.3766. On the other hand, a decline of the pair would look for support in the previous week's low levels near 1.344.
