INTRADAY TECHNICAL ANALYSIS 18 OCTOBER (observation as of 06:30 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.16412 and 1.16837.
- Support line of 1.15562 and 1.15137.
Commentary/ Reason:
The dollar made small gains on the euro, last trading for $1.15783 per euro, and stays in a narrow trade band since last Wednesday.
The dollar found support on Monday from higher T-note yields, which strengthened the dollar’s interest rate differentials.
The EUR/USD is beginning to oscillate within a tighter range, between the 1.155 and 1.161 price levels. While there’s a lack of bullish conviction, yet sellers also appear to lack the appetite to drive price action. Therefore, price action is likely to float horizontally in the near-term.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92931 and 0.93217.
- Support line of 0.92005 and 0.91719.
Commentary/ Reason:
The dollar rose against the Swiss franc, jumped 0.24% to 0.92517.
The dollar found a footing as soft economic data in China and climbing oil prices jangled investors’ nerves that inflation will drive interest rates higher.
The USD/CHF pair fluctuates between the key levels represented by 0.9200 support and 0.929 resistance, which represent the next trend keys, as the price needs to breach one of these levels to detect its next destination clearly, which makes us continue with our neutrality until now.
With a quiet calendar on Monday, traders are looking ahead to the release of the Fed’s ‘beige book’ of economic conditions on Wednesday and keeping an eye on China’s credit markets where several developers owe coupon payments this week.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.479 and 114.670.
- Support line of 114.097 and 113.906.
Commentary/ Reason:
The yen hovered near its almost three-year low against the dollar, last buying for 114.288 yen.
The pair closely follow the price action in the U.S. Treasury yields, tagging along with the benchmark 10-year rates. The renewed uptick in the yields drove the currency pair back towards the multi-year tops reached on Friday.
The re-emergence of the China slowdown worries combined with surging oil prices tempered the market mood, dragging the Asian market and supported the dollar bulls.
The USD/JPY pair has moved beyond another previous resistance zone, as bullish sentiment has risen again.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.37790 and 1.38276.
- Support line of 1.36216 and 1.35730.
Commentary/ Reason:
Sterling held at $1.37234, just below Friday’s one-month high of $1.3773.
Sterling managed to hold on after hawkish weekend remarks from Bank of England Governor Andrew Bailey put rate rises in investors’ fresh sights, following his remarks that policymakers “will have to act” as energy prices drive consumer prices higher.
If this week’s inflation reading goes beyond expectations, traders could be aggressively betting on the odds of the Bank of England starting the monetary tightening cycle soon.
British pound also was supported on the renewed Brexit optimism.