INTRADAY TECHNICAL ANALYSIS 2 JUNE (observation as of 05:00 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.22546 and 1.22717.
- Support line of 1.21991 and 1.21819.
Commentary/ Reason:
The euro added 0.06% to $1.22204 against the dollar after pulling back from near a multi-month top overnight, when it climbed to $1.22538.
A better-than-expected Eurozone economic data supported on the euro. The Markit manufacturing PMI, May CPI, and the unemployment rate all showing a better-than-expected data.
Another positive factor for EUR/USD is an easing pandemic in Germany, which should allow restrictions to be lifted that leads to stronger economic activity. Germany on Tuesday cut its Covid risk level from "very high" to "high".
Meanwhile for dollar, comments on Tuesday from St. Louis Fed President Bullard were hawkish for monetary policy and positive for the dollar when he said the U.S. jobs market is "tighter than it looks" and the Fed is close to launching a discussion about tapering its $120 billion-a-month asset purchase program.
Higher T-note yields also supportive for the dollar as the 10-year T-note yield climbed to a 1-week high of 1.637%, which strengthens the dollar’s interest rate differentials.
Eurozone inflation surged past the ECB’s elusive target in May, heightening a communications challenge for policymakers who will happily live with higher prices for now, but may face a backlash from irate consumers. Higher inflation is compounding the plight of savers and the ECB should respond by raising its interest rates from 0%, Bavaria’s Finance Minister Fueracker told daily Bild in comments published on Wednesday.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90059 and 0.90284.
- Support line of 0.89333 and 0.89108.
Commentary/ Reason:
The dollar rose fractionally higher against the Swiss franc on Wednesday, added 0.04% to trade at 0.89742.
The pair was little changed and trading in rangebound as traders awaited on more economic data for the day to gauge for the next inflation trajectory.
Though the dollar was positioned to be more advantageous and supported as investors returned to safe-haven currencies due to cautious sentiment on the global market.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.42497 and 1.42910.
- Support line of 1.41163 and 1.40750.
Commentary/ Reason:
Sterling was flat at $1.41481 on Wednesday after easing off a 3-year high of $1.42472 reached Tuesday.
The British pound found support amid market expectations for policy tightening in the UK. The improving outlook for growth is fuelling speculation that the BoE will join its peers in Canada and New Zealand by signalling that it may start to raise interest rates next year.
The pound also advanced as traders bet the U.K.’s economic recovery will gain traction with the rollout of coronavirus vaccines. The progress of vaccination puts the U.K. closer and faster to economic normalization than other countries.
The GBP/USD pair continues to bounce along the support and resistance rangebound, although selling activity has increased in the last few trading sessions. The ascending trendline has contained any previous pullbacks in the past.
