INTRADAY TECHNICAL ANALYSIS 14 JULY (observation as of 06:45 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.01099 and 1.01836.
- Support line of 0.99625 and 0.98888.
Commentary/ Reason:
The euro was hovering back just above parity with the dollar at $1.00170. It briefly dipped to $0.99978 overnight, breaking below $1 for the first time since December 2002.
The common currency has been weakened by Europe’s energy supply concerns and economic troubles, while the safe-haven greenback is supported as investors feared more supersized Fed rate hikes could be on the way.
The U.S. Federal Reserve is expected to deliver a rate hike of possibly up to 100 basis points this month after a mostly grim inflation report showed price pressures, already running at a 40-year high, accelerating further.
The European central bank faces a dilemma of whether to let the currency fall further, pushing up already record high inflation, or fighting back with more rapid interest rate hikes increasing the damage to an economy already hit hard by high energy costs.
The EUR/USD pair keeps the overall negative scenario active, waiting to break the last level to open the way to head towards our next target at 0.9962. Bearish trend continue to be suggested for the upcoming period unless the price rallied to breach 1.0109 and hold with a daily close above it.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.98809 and 0.99357.
- Support line of 0.97713 and 0.97165.
Commentary/ Reason:
The dollar rose 0.36% to last bought 0.98206 franc, rebounded towards a four-week high having declined for two consecutive days.
The greenback took on a positive tone, supported by the release of U.S. CPI data which came in above expectations at 9.1% versus the forecast of 8.8%, making room for more severe measures by the U.S. Federal Reserve, which is likely to accelerate its interest rate hikes.
The USD/CHF pair traded with clear negativity yesterday after breaking the bullish channel’s support line, noticing that the price returns to recover and attempts to return to the mentioned channel, supported by stochastic and the EMA50 positivity, waiting for more rise to breach 0.9880 initially, to rally towards our next positive target at 0.9935.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 138.493 and 139.664.
- Support line of 136.151 and 134.980.
Commentary/ Reason:
The dollar was 0.92% higher at 138.618 yen, reaching for the first time since September 1998.
Safe haven dollar remained bid as higher-than-expected U.S. inflation stoked fears that the Federal Reserve will raise interest rates even more aggressively to slow price increases.
While the Japanese yen taken a beating as the Bank of Japan sticks with its ultra-easy monetary policy.
The demand for the greenback also was strong amid a decline in global stock markets linked to renewed fears of more China’s economic problems as a new outbreak of COVID-19 was reported in Shanghai.
Focus going forward will be on the release of the U.S. PPI, with consensus is to land at 8.1%, lower than the prior release of 8.3%.
The USD/JPY pair succeeded to achieve waited target at 138.493 and attempts to breach it, reinforcing the expectations of extending the bullish wave on the short term and medium term basis, with the next positive target at 139.664.
The EMA50 continues to support the suggested bullish wave, which will remain valid unless breaking 136.151 and holding below it.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.19812 and 1.20343.
- Support line of 1.18094 and 1.17563.
Commentary/ Reason:
Sterling slumped 0.34% to $1.18484, sinking back toward a two-year low of $1.18072 reached earlier in the week.
Sterling has slipped on the stronger dollar and adrift in the wake of the resignation of British Prime Minister Boris Johnson last week, on top of the higher-than-expected U.S. inflation data. The BoE’s monetary policy and the UK macroeconomic outlook remains more relevant for the pound.
The British pound had gotten some small respite overnight from data showing the British economy unexpectedly expanded in May.
The GBP/USD pair bounced bearishly after approaching positive target at 1.1981, as the EMA50 formed strong negative pressure against the price, to resume the main bearish wave within the bearish channel that appears on the chart, waiting to head towards 1.1809 as a next main station.
Breaking 1.1809 will reinforce the expectations of continuing the decline on the intraday and short term basis, with the negative scenario will remain valid unless breaching 1.1981 and hold above it.
