INTRADAY TECHNICAL ANALYSIS 5 MAY (observation as of 08:45 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.06617 and 1.07159.

-        Support line of 1.04863 and 1.04321.

Commentary/ Reason:

  1. The euro eased 0.30% to $1.05870 on Thursday, after rose nearly 1% overnight.

  2. Euro’s strength was weakened after the EU spelled out plans to phase out imports of Russian oil over its war in Ukraine, pressuring Europe's energy security, inflation, and growth.

  3. It rose moderately on higher Eurozone government bond yields that strengthened the euro’s interest rate differentials.  The Germany's 10-year government bond traded near multi-year highs, hitting its highest yield since June 2015 on hawkish comments from ECB board member Isabel Schnabel who said a rate hike in July was possible.

  4. The dollar slipped in the wake of the Federal Reserve’s rates hike decision. The U.S. Fed decision was in line with the market’s expectations while cooled down expectations for a 75-bps hike.

EURUSD              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.97682 and 0.97993.

-        Support line of 0.96667 and 0.96353.

Commentary/ Reason:

  1. The dollar jumped against the Swiss franc on Thursday, added 0.60% to trade at 0.97776 franc, staying close to yesterday's closing price of two-year high.

  2. The pair remains elevated amidst a risk-off market sentiment, triggering a flight to safe-haven assets. China’s COVID-19 woes grabbed some attention, with news of Shanghai’s lockdown measures kept traders anxious. The USD/CHF also has been driven higher by a strong rally in U.S. dollar thanks to the Federal Reserve’s hawkish stance.

  3. In the meantime, EU’s plans to phase out imports of Russian oil over its war in Ukraine, pressuring Europe's energy security, inflation, and growth.

  4. USD/CHF reverses the previous day’s pullback from a two-year high as buyers attack 0.9768 heading into Thursday’s European session. Given the firmer RSI, the USD/CHF pair’s recent rebound is likely approaching the 20-SMA level surrounding 0.9768. However, an ascending trend line connecting multiple tops marked since April 28, around 0.980, will challenge the bull’s dominance.

  5. Alternatively, a clear downside break of the 0.966 support confluence won’t hesitate to refresh the weekly low under 0.9635.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 131.930 and 133.048.

-        Support line of 128.314 and 127.196.

Commentary/ Reason:                                        

  1. The dollar slipped below 130 yen for the first time in a week, to trade at 129.815 on Thursday afternoon session.

  2. Trading activity on Thursday in USD/JPY was muted, with Japanese markets closed for the Golden Week holidays.

  3. A slump in T-note yields strengthened the yen, though The BoJ's stubborn commitment to it zero-rate programme puts it at odds with major central banks that are shifting toward tighter monetary policy, further weighed on the yen.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.27705 and 1.28530.

-        Support line of 1.25035 and 1.24210.

Commentary/ Reason:

  1. Sterling rose more than 1% on Wednesday but was under pressure today, was down 0.75% at $1.25294.

  2. Traders were anxious ahead of a Bank of England meeting. The BoE is expected to lift British rates later today by a quarter of a percentage point, which would be its fourth hike in a row to combat soaring prices.

  3. The war in Ukraine also remains on investors’ radar. Russian forces have reportedly renewed their assault on the Azovstal steelworks complex, a last stronghold for Ukrainian fighters in the southern port city of Mariupol.

  4. Meanwhile, the EU has proposed a gradual ban on Russian oil in its sixth round of sanctions against Moscow since the unprovoked invasion of Ukraine.

GBPUSD