INTRADAY TECHNICAL ANALYSIS 13 DECEMBER (observation as of 04:30 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.14077 and 1.14646.

-        Support line of 1.12236 and 1.11666.

Commentary/ Reason:

  1. The euro dipped 0.16% to $1.12983 on Monday, though still traded rangebound for the last two weeks.

  2. Tame U.S. inflation combined with looming uncertainty over the Omicron COVID-19 variant keep investors on the edge, as they brace for the Fed and ECB monetary policy decisions this week.

  3. Investors now expect the Fed to announce an acceleration of tapering its bond buying programme on its meeting on Wednesday, opening the door to at least one interest rate hike next year. An acceleration of tapering would likely support the dollar particularly versus currencies whose central banks will likely be slower to tighten. Though investors may prefer to wait from the ECB the day after before chasing the move.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.92528 and 0.92761.

-        Support line of 0.91777 and 0.91545.

Commentary/ Reason:

  1. The U.S. dollar remained stuck in a sideways lateralisation against the Swiss franc on Monday.

  2. The greenback rose 0.14% higher against the Swiss franc, last traded at 0.92184 franc.

  3. Risk-on mood weighs on the safe-haven Swiss franc.

  4. Markets have swung widely since the new strain emerged due to worries it could have a major impact, initially driving flows to safe-haven assets. Reports that it may not be as bad as feared caused these flows to reverse last week.

  5. The dollar was also buoyed by the resumption of market expectations of Federal Reserve rate hikes in 2022. Market expectations on monetary policy changes have been the major driver behind the recent price actions in USD/CHF.

  6. Also holding meetings in the week is the Swiss central bank.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 114.058 and 114.316.

-        Support line of 113.222 and 112.964.

Commentary/ Reason:                                        

  1. The dollar was a shade firmer on the yen at 113.559 but faced resistance below the 114.00,

  2. The yen weakened slightly after a rise in Japan’s Nikkei Stock Index sparked some safe-haven selling of the yen.  Also, higher T-note yields on Monday supported gains in the dollar.

  3. All eyes remain on the Fed monetary policy decision for fresh hints on a potential 2022 rate hike, which will eventually impact the yields and the USD/JPY pair.

  4. Divergent monetary policies continued to influence the currency’s movement, as hawkish signals from the Fed contrasted with the BoJ’s firm commitment to retain easy monetary policies to achieve its 2% price stability target.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.33100 and 1.33640.

-        Support line of 1.31810 and 1.31060.

Commentary/ Reason:

  1. The pound slipped 0.12% to $1.32512 after British Prime Minister Boris Johnson warned about the impact of the new COVID-19 variant.

  2. Johnson on Sunday said Britain faces a "tidal wave" of the Omicron variant of coronavirus and that two vaccine doses will not be enough to contain it. The government raised the coronavirus threat level Sunday and warned the rapid spread of the Omicron strain pushed the country into risky territory.

GBPUSD