INTRADAY TECHNICAL ANALYSIS 17 JUNE (observation as of 08:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.06479 and 1.07320.
- Support line of 1.03756 and 1.02914.
Commentary/ Reason:
The euro slipped 0.18% to $1.05277 on Friday, but still headed for 0.30% weekly gains.
The euro dropped earlier in the week, was pressured by rising U.S. Treasury yields. Traders are also digesting the impact of yesterday’s Federal Reserve rate hike and economic projections.
The single currency however found some support, after the ECB's announced following an emergency meeting on Wednesday that it plans to create a new tool to tackle the risk of euro zone fragmentation, a move aimed at assuaging fears of a fresh debt crisis for the common currency bloc.
The ECB’s decision to create a new tool to contain strain in Euro bond markets paves the way for it to deliver three, 50 basis point interest-rate increases this year, according to Deutsche Bank.
Sentiment also turned sour towards the end of the week for the dollar after several key pieces of economic data fell short of forecasts this week, ranging from May retail sales to housing starts, compounding the Fed-induced recession fears.
On the data front in Europe, final euro zone inflation readings for May are due on Friday.
The EUR/USD pair rallied upwards strongly yesterday after breaching the previous resistance level, now to attack 1.0647 and attempts to breach it, though to start crawling negatively by today’s open, which encourages us to suggest the bearish bias for today, supported by stochastic negativity, waiting to visit 1.03756 followed by 1.02914 levels as next main stations.
The bearish trend is to be expected on the intraday basis, noting that breaching 1.0647 will stop the negative scenario and push the price to achieve new bullish correction that its next target reaches 1.0732.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 1.99830 and 1.01205.
- Support line of 0.95380 and 0.94005.
Commentary/ Reason:
The dollar slipped lower to 0.96436 on Friday, was down 0.10% on top of 2.77% drop overnight. The pair is now on track to 2.10% weekly losses.
The Swiss franc's leapt higher after the Swiss National Bank surprised investors yesterday by raising interest rates for the first time in 15 years by 50 basis points.
The USD/CHF pair has sharply declined, retreating from the monthly maximum of 1.0050 reached on Tuesday. The price finds solid support above 0.9538 support line, to start bouncing bullishly and build new bullish wave, supported by stochastic positivity, which encourages us to suggest the bullish bias for the upcoming period, targeting 0.9983 followed by above the 1.00 levels as next main stations.
Holding above 0.9538 is important to continue the expected rise, as breaking it will press on the price to suffer additional losses in the upcoming period.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 135.391 and 136.003.
- Support line of 133.411 and 132.799.
Commentary/ Reason:
The greenback was firm on Friday against the yen, rising 1.65% to 134.323 per yen.
However, the last two days drop still brings the pair to head lower to end this week, losing about 1.68%.
The Bank of Japan on Friday announced it would maintain its ultra-easy monetary policy. The Japanese central bank’s decision stands in sharp contrast to that of its global peers. Earlier this week, the U.S. Federal Reserve, Bank of England and Swiss National Bank all raised their benchmark rate hikes.
Volatility in government bond markets weighed on the yen, on higher U.S. rates versus rock bottom Japanese yields. The latest surge came after the Bank of Japan ramped up its bond buying to keep yields near zero, even as much of the rest of the world tightens policy. With the Bank of Japan expanding bond purchases on Tuesday and didn’t budge from its ultra-low rates policy at its Friday meeting, a respite for the yen looks unlikely.
Doubts about the sustainability of the central bank’s stance had stirred speculation of a potential policy surprise. Japan’s 10-year bond yield hit 0.265% earlier Friday, the highest since 2016, challenging a curve control policy that seeks a cap of 0.25%.
The USD/JPY pair opened today with strong decline, before the price recovers, which keeps the bullish trend scenario active for the upcoming period, waiting to visit 135.391 followed by 136.00 levels mainly.
Stochastic provides positive signals that support the expected rise, which will remain valid conditioned by the price stability above 133.411.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.24926 and 1.26320.
- Support line of 1.20414 and 1.19020.
Commentary/ Reason:
Sterling slipped 0.43% to $1.22961 on Friday, though heads for a steady week following an almost 3% rise on the last two days.
The UK central bank delivered a quarter-point rate increase on Thursday - a third the size the U.S. Fed pushed through the night before. BoE policymakers also signalled they will move “forcefully” in the future if needed.
The rate rise, which was smaller than expected but prompted gilts to sell and sterling to rise on bets that future hikes would come thick and fast. Two-year gilts rose 18 basis points to 2.143%.
The GBP/USD pair soared yesterday after completing the positive pattern that appears on the chart, to head towards achieving expected gains on the intraday basis, targeting visiting 1.2492 as a next positive station.
