INTRADAY TECHNICAL ANALYSIS 28 OCTOBER (observation as of 05:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.16681 and 1.16972.
- Support line of 1.15739 and 1.15448.
Commentary/ Reason:
The euro was muted, trading at $1.16062 as traders looked for possible catalysts from policy meeting by the European Central Bank.
The ECB is due to meet later today, with investors watching out for the central bank’s stance on rising global consumer prices and for any clarity on the outlook for its ultra-easy policy stance.
The ECB is expected to keep policy unchanged and leave a decision on its pandemic emergency bond purchase program to December, but its president Christine Lagarde is expected to push back on market pricing that has seen breakeven inflation expectations hit seven-year highs above the ECB’s 2% target and a rate hike priced in for next year.
Meanwhile the Fed is almost unanimously expected to announce tapering of its bond purchase at its policy meeting, due next week.
The EUR/USD pair continue to languish within the narrow trading range between 1.157 and 1.166 price levels, with plenty of room in case the right catalysts emerge.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92092 and 0.92263.
- Support line of 0.91538 and 0.91367.
Commentary/ Reason:
The dollar was a tad higher against the Swiss franc, traded at 0.91856.
Mixed market sentiment, in the wake of growing inflation fears, strong American earnings reports and U.S. stimulus progress, keeps the dollar underpinned, though a lower U.S. benchmark 10-year Treasury bond yields weights.
On the other hand, the Swiss franc gains momentum on its safe-haven appeal. The risk-off impulse in the market on Thursday benefitted the safe-haven Swiss franc.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.167 and 114.612.
- Support line of 113.277 and 112.832.
Commentary/ Reason:
The Japanese yen traded at 113.549 per dollar, stronger than levels above 114 seen earlier in the week.
A broad sell-off in the Japanese shares lifted yen’s demand. The ebbing risk sentiment pushed up the safe-haven Japanese yen which rose 0.25% against the U.S. dollar.
The yen also supported as the BoJ hold steady on policy, as widely expected. The Bank of Japan kept monetary policy settings unchanged and projected inflation to stay below its 2% target for at least two more years, reinforcing market bets it will lag other central banks in dialling back crisis-mode policies.
The USD/JPY is moving into a tight consolidation channel as price action has narrowed after a pullback from resistance line. Neither buyers nor sellers appear to have the conviction to dominate near-term price direction therefore, the pair is likely to move horizontally until the fundamentals picture changes.
Investors meanwhile kept cautious ahead of Japan's elections on Sunday.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.37851 and 1.38130.
- Support line of 1.36949 and 1.36670.
Commentary/ Reason:
Sterling was little changed on Thursday, traded at $1.37452.
Rising bets for an imminent Bank of England rate hike move lent support for the pound, but tensions between the UK and France over fishing rights, along with a fresh row over the Northern Ireland protocol acted weighed on the British pound.
The Fed and the Bank of England will meet next week, with markets siding with the pound having priced a good chance that the Bank of England is to raise interest rates before the end of this year.
