INTRADAY TECHNICAL ANALYSIS 21 MAY (observation as of 05:20 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.22461 and 1.22702.

-        Support line of 1.21681 and 1.21440.

Commentary/ Reason:

  1. After bouncing off a 4-month low on the euro as the mere mention of tapering policy prompted fears of early rate rises, the dollar has dropped back at $1.22338 per euro.

  2. EUR/USD rallied moderately on strength in Thursday’s Eurozone economic data.  Eurozone Mar construction output rose the biggest increase in 7 months.  Also, German Apr PPI rose the strongest report in 9-3/4 years.

  3. The stronger data also boosts German bund yields, which is positive for EUR/USD. The 10-year German bund yield rose +0.1 bp Thursday at -0.109%, modestly below Wednesday’s 2-year high of -0.074%.

  4. Moves for today were slight as traders awaited Purchasing Managers’ Index figures across Europe and the U.S.

  5. Although the pandemic situation in the U.S. has improved after the 7-day average of new U.S. infections fell to a 10-3/4 month low of 30,346 on Wednesday, the dollar continues to be undercut by the pandemic that has slowed economic growth and is dovish for Fed policy.

  6. The EUR/USD has found support once again and the latest bullish move may result in the pair climbing towards the 1.227 resistance area. The 1.216 price level will now act as a key support level going forward. Momentum indicators remain bullish.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.90485 and 0.90822.

-        Support line of 0.89393 and 0.89056.

Commentary/ Reason:

  1. The dollar eased to 0.89640, down 0.10% against the Swiss franc on Friday.

  2. The dollar has given back a bounce it made after a mention of possible future tapering discussions, in minutes from the Fed’s April meeting, prompted fears of early rate rises.

USDCHF

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.42178 and 1.42537.

-        Support line of 1.41016 and 1.40657.

Commentary/ Reason:

  1. Sterling last traded steady at $1.41844.

  2. Sterling is perched close to its highest since 2018 as high vaccination rates support a stronger-than-expected economic recovery.

  3. The British pound is now heading for a third consecutive weekly gain and has climbed 2.6% during May so far.

  4. The GBP/USD pair has failed to build on the bullish break for the last 3 trading sessions. Sellers remain active, yet lack the conviction to drive a change in price direction.

  5. Traders now awaited on the county retail sales figures, as well as May PMIs, due later today, which might deliver a further boost.

GBPUSD