INTRADAY TECHNICAL ANALYSIS 25 NOVEMBER (observation as of 05:40 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.13150 and 1.13765.

-        Support line of 1.11920 and 1.11305.

Commentary/ Reason:

  1. The euro was traded at $1.12134 against the dollar, rose 0.15% on Thursday, though still pinned down near the 17-months low reached Wednesday.

  2. The euro is under pressure from a combination of U.S. rising interest rates, COVID-19 developments in the region, and the prospect of severe restrictions in the region.

  3. Coronavirus infections broke records in parts of Europe on Wednesday, with investors worried the continent was again the epicentre of a pandemic that has prompted new curbs on movement.

  4. Germany's Ifo index of business sentiment in November meanwhile stood at 96.5, slumped for a fifth straight month, blamed on supply bottlenecks in manufacturing and a spike in coronavirus infections, raising the prospect that Europe's biggest economy could stagnate in the Q4.

  5. Supporting the greenback, several U.S. Federal Reserve policymakers said they would be open to speeding up the tapering of the central bank's bond-buying programme if the high rate of inflation held, and move more quickly to raise interest rates, minutes of the Fed's Nov. 2-3 policy meeting showed.

  6. The EUR/USD continues its march lower and now price action has taken a rest at above the support line. Despite momentum indicators testing oversold conditions, no reversal appears to be on the cards as bears take control. Price action will likely flatten at the current price level.

  7. While the U.S. calendar is mostly empty on Thursday due to the Thanksgiving holiday, minutes from the European Central Bank's Oct. 28 meeting are due for release. Lagarde gives a speech at an ECB legal conference later on Thursday, at which board members Frank Elderson and Edouard Fernandez-Bollo will also participate.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93546 and 0.93730.

-        Support line of 0.92950 and 0.92776.

Commentary/ Reason:

  1. The Swiss franc was flat on Thursday after four days of downtrend put the currency at six-month low overnight.

  2. The dollar was last trade at 0.93365 franc.

  3. The U.S. dollar was supported amid expectations for a faster tapering process and possible rate hikes by the Federal Reserve. The U.S. FOMC meeting minutes indicated that the committee members would not hesitate to address inflationary pressures, implying that the tapering process could be quickened, and a rate hike could happen sooner.

  4. On the other hand, the franc holds on to its safe-haven appeal, as investors see the currency as a safe haven investment amid market uncertainties due to rising COVID-19 cases in Europe.

  5. Heavy selling pressure on early trading prevented a break of the 0.937 price ceiling. Alternatively, July’s high close to 0.9275 will challenge the bears.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 115.688 and 115.961.

-        Support line of 114.805 and 114.533.

Commentary/ Reason:                                        

  1. The dollar is flat on Thursday, trading near its highest in almost five-years versus the Japanese currency at 115.379 yen.

  2. A hawkish tilt by Federal Reserve policymakers and strong U.S. data supported the greenback.

  3. Expectations of faster interest rate hike, contrasted to more dovish monetary outlooks in Europe and Japan pushed U.S. treasury yields higher, which pushed the dollar higher.

  4. The yen also came under pressure after the Nikkei newspaper on Wednesday reported that Japan plans to issue 22.1 trillion yen ($192 billion) in bonds to help pay for another extra budget in the pandemic.

  5. Meanwhile, investors also digesting the latest comments from Japan on a potential oil reserves release. The broader market sentiment is expected to lead the way going forward.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.33910 and 1.3420.

-        Support line of 1.32970 and 1.32680.

Commentary/ Reason:

  1. Sterling rose 0.13% to $1.33430 after dipping as low as $1.3317 on Wednesday for the first time in 11 months.

  2. A bright UK economic data helped supported the British pound. The country’s industrial orders surged this month with a growth measure hitting its highest since at least 1977 and price expectations among manufacturers also climbed to a 44-year high, according to a survey published on Wednesday.

  3. The survey, however, is likely to add to unease at the BoE about growing inflation pressures ahead of the British central bank's announcement on Dec 16 about whether it is raising interest rates from their pandemic lows.

  4. The BoE wrong-footed many investors when it did not lift rates from record lows of 0.1% at the start of the month, following comments from its governor Andrew Bailey in October that policymakers "will have to act" to head off inflation.

  5. Bailey speaks at Cambridge University later Thursday.

GBPUSD