INTRADAY TECHNICAL ANALYSIS AUGUST 26 (observation as of 07:40 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.00462 and 1.00921.

-        Support line of 0.98975 and 0.98515.

Commentary/ Reason:

  1. The euro was at $0.99556 on Friday, having failed in several attempts this week to break back above parity against the dollar. It fell below that psychologically important level on Monday.

  2. The pair is headed for about 0.60% weekly losses.

  3. The euro weighed as recession fears in Europe re-emerged again with a deepening energy crisis. In addition, flash August Global S&P PMIs showed business activity across the Euro Area contracted for the second straight month, albeit at a softer than expected rate. Germany recorded the sharpest decline in output since June 2020 and activity in France decreased.

  4. Details from last month's ECB meeting - when the bank hiked rates by 50-bps — showed concerns among policymakers that inflation is becoming entrenched.

  5. Ahead of the highly-anticipated Jackson Hole Symposium, however, investors might refrain from taking large positions, causing the market action to remain choppy for the remainder of the day.

EURUSD

              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.96741 and 0.97064.

-        Support line of 0.95696 and 0.95372.

Commentary/ Reason:

  1. The dollar rose against the Swiss franc, added 0.20% to 0.96510 franc on Friday, and set to end the week 0.44% higher.

  2. The USD/CHF remains at positive territory just below the five-week highs around recorded on Tuesday, courtesy of broad U.S. dollar strength across the board, amidst a cautious market mood, as investors are awaited on the speech by Federal Reserve Chair Jerome Powell for fresh clues on the path for monetary policy.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 137.918 and 138.643.

-        Support line of 135.572 and 134.847.

Commentary/ Reason:                                        

  1. The dollar gained 0.43% to 137.028 yen, remained not too far from this week's one-month high of 137.705.

  2. Short covering and repositioning in the dollar pushed prices higher ahead of Fed Chair Powell’s speech at the Fed’s annual symposium at Jackson Hole, Wyoming.

  3. The Fed-BoJ policy divergence also continue to act as a tailwind for the major. BoJ policymaker on Thursday vows to keep ultra-low rates. The BoJ has refrained from joining a flurry of interest rate hikes by central banks battling record surges in prices, as it focuses on supporting Japan's delayed recovery from the pandemic's hit.

  4. The outlook for Japan's economy was clouded by a renewed spike in pandemic cases, lingering supply constraints and persistent rises in global commodity prices.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.18400 and 1.18763.

-        Support line of 1.17226 and 1.16863.

Commentary/ Reason:

  1. Sterling was down 0.27% at $1.17980 on Friday, stood marginally changed from when the pair started early in the week.

  2. Britain's energy regulator later in the day is expected to announce a jump in a cap on energy prices, further boosting inflation in an already struggling British economy. Fuel price increases are passed on to British consumers through a price cap, calculated every three months.

  3. The dollar meanwhile held onto recent gains against sterling ahead of Federal Reserve Chair Jerome Powell's widely-anticipated speech, which traders hope will offer clues on the U.S. central bank's tightening plans.

GBPUSD