INTRADAY TECHNICAL ANALYSIS 28 MAY (observation as of 04.50 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.22196 and 1.22356.
- Support line of 1.21675 and 1.21514.
Commentary/ Reason:
The euro stood little changed at $1.21891 on Friday, hovering below its 5 1/2-month high touched on Tuesday of $1.22659 as dovish comments from the ECB officials sapped its momentum ahead of its policy meeting on June 10.
The EUR/USD held on to strength in German bund yields.
Although the 10-year T-note yield also rose to above 1.60%, which strengthens the dollar’s interest rate differentials and is supportive of the dollar.
The EUR/USD has pulled back and 1.216 is the first support level. Both support areas typically facilitate a bullish rebound and therefore further upside moves can be anticipated. Momentum indicators have stalled in bullish territory.
The PCE deflator that is due later today will be closely watched as the preferred core inflation guide.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90114 and 0.90320.
- Support line of 0.89449 and 0.89244.
Commentary/ Reason:
The Swiss franc traded lower against the US dollar today, as investors returned to safe-haven currencies due to cautious sentiment on the global market.
The dollar rose 0.13% against the Swiss franc on Friday, to trade at 0.89781, reversing overnight loss of 0.14%.
Investors reacted from the mixed U.S. economic data, with the number of initial jobless claims coming in lower than expected, which was bullish for the greenback.
Though on the other hand, much weaker-than-expected pending home sales data put the American currency under pressure. GDP data, roughly in line with expectations, failed to clear investors' doubts over the U.S. economic recovery.
Market attention now turns to U.S. inflation data due on Friday. A jump in prices could be seen as prompting the Fed to scale back its easy money policies.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.42507 and 1.43003.
- Support line of 1.40900 and 1.40303.
Commentary/ Reason:
The British pound now held at $1.4196 after rising 0.61% on Thursday.
The market is reacting to a hawkish headline after a Bank of England policymaker said the central bank was likely to raise rates well into next year and that an increase could come earlier.
A higher 10-year T-note yield today meanwhile strengthens the dollar’s interest rate differentials and held back sterling from climbing higher.
The U.S. currency now looks to upcoming inflation data later today.
