INTRADAY TECHNICAL ANALYSIS 6 MAY (observation as of 08:20 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:
The euro slipped 0.11% to $1.05264 on Friday, with the currency has mostly traded sideways since sliding to a five-year trough of $1.04712 last week.
The euro was broadly lower against the US dollar as risk-off sentiment continued to dominate the local note's direction.
A sharp stocks selloff boosted demand for the safe-haven currency and as the Federal Reserve was seen as tightening monetary policy more than peers. The pair is expected to remain weak on Friday as concerns over possible aggressive tightening by the US Fed had spooked the market again.
The euro was also dented after German data showed that industrial orders in March suffered their biggest monthly drop since last October. The single currency has fallen as the region struggles with weaker growth and energy disruptions due to sanctions imposed on Russia after its invasion of Ukraine.
The EUR/USD pair’s bullish correction stopped at first resistance line, to rebound downwards strongly and resume the bearish track, to head towards achieving more expected decline in the upcoming sessions, moving within minor bullish channel that we believe it forms bearish flag pattern.
Breaking 1.0486 will provide strong negative motive that supports the chances of continuing the negative trades to open the way to achieve additional negative targets that followed by 1.0432.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.99303 and 1.00010.
- Support line of 0.97017 and 0.96310.
Commentary/ Reason:
The dollar hit a 3-year high against the Swiss franc on Thursday, and stood just below the mark on Friday, at 0.98532 franc.
A sharp stocks selloff boosted demand for the safe-haven currency dollar and as the Federal Reserve was seen as tightening monetary policy more than peers.
China’s COVID-19 woes also grabbed some attention, with news of Shanghai’s lockdown measures kept traders anxious.
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.
The USD/CHF’s first resistance would be March’s 23 daily high at 0.99303. And once cleared, the next step would be the parity at 1.000.
[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:
The greenback added 0.28% to 130.555 yen, gaining 0.30% on the week, and taking it closer to last week's 20-year top of 131.243.
The greenback was up for a ninth week against the yen, as benchmark U.S. Treasury yields resumed their climb - topping 3.1% overnight - after a blip lower immediately after the Federal Reserve raised interest rates by half a percentage point mid-week, placing it at the vanguard of hawkish global central banks.
A rise in T-note yields strengthened the dollar, meanwhile 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.
The USD/JPY is still staying in range below last week's 20-year top and intraday bias remains neutral. Near-term outlook stays bullish with 128.314 support intact and further rally is expected. On the upside, break of 131.930 will resume recent up trend to 133.048.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.26309 and 1.27493.
- Support line of 1.22478 and 1.21293.
Commentary/ Reason:
The British pound tumbled 2.22% overnight, the most in two years, against the dollar on Thursday after the BOE warned the UK risks recession alongside double-digit inflation.
It stood 0.15% lower to $1.23402 on Friday, and off 1.62% for the week.
Sterling fell to its lowest level since June 2020 after the Bank of England raised interest rates to their highest since 2009 and sent a stark warning that Britain risks a double-whammy of a recession and inflation above 10%
The BoE raised rates by 25 basis points as expected, with two policymakers expressed caution about rushing into future rate hikes. read more
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.
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.
The dollar remains supported on the back of soaring T-note yields after the 10-year T-note yield jumped more than above 3% to a 3-1/2 year high.
A slump in stocks Friday also boosted some safe-haven buying of the greenback.