INTRADAY TECHNICAL ANALYSIS 12 NOVEMBER (observation as of 06:45 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.15054 and 1.15521.
- Support line of 1.14120 and 1.13653.
Commentary/ Reason:
The dollar pushed the euro back to a 16-month low, now traded at $1.14416 and headed for more than 1% decline for the week.
The dollar retains its post-inflation strength. The dollar is supported on speculation the Fed may be prompted to raise interest rates earlier than previously thought after Wednesday’s U.S. Oct CPI data showed prices climbing at their fastest pace since 1990.
The dollar also extend its gains on increased safe-haven demand after the U.S. warned the European Union of a potential invasion of Ukraine by Russia.
The EUR/USD price action has continued the trajectory albeit at a more moderate pace. Momentum indicators suggest that there is further downside potential, although are fast approaching oversold conditions.
Traders will be watching inflation readings from a University of Michigan survey, along with JOLTS job openings data later in the global day. European Central Bank chief economist Philip Lane also speaks later today.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92354 and 0.92555.
- Support line of 0.91705 and 0.91505.
Commentary/ Reason:
The dollar scored its second consecutive day of gains against the safe haven Swiss franc, up 0.17% at 0.92238, stays around the 2-1/2-week high touched early on today, en route to a 0.95% weekly gain.
US inflation data came in higher than expected at 4.6% against the forecast of 4.3%, thus becoming the main catalyst for the upward movement in the dollar-franc pairing.
Swiss National Bank governing board member Andrea Maechler meanwhile said at an event late on Thursday that the Swiss franc remained in demand as a safe haven investment with market uncertainties elevated due to the ongoing COVID-19 pandemic.
The USD/CHF pair is testing the 0.923 resistance line as the pair has found strong support in recent trading, after a period of consolidation. This resistance zone has proven to be an obstacle in the past for buyers, therefore strong conviction will be required to break the current trading range.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.371 and 114.748.
- Support line of 113.617 and 113.240.
Commentary/ Reason:
The Japanese yen traded at 114.239 per dollar, struggling to recover after weakening from below 113.5 against the greenback earlier in the week.
The dollar rose as high as 114.298 yen early on Friday, a one-week peak while on track to 0.60% gains for the week.
Central bank divergence between the Federal Reserve and the BoJ weighed on the yen, with the Fed expected to tighten monetary policy well before the BoJ.
The dollar also supported higher as soaring T-note yields weighed on the yen.
The USD/JPY will make another test of the 114.37 price ceiling as bullish sentiment has been on the rise. Buying activity however has been waning in recent trading which casts doubt that there is enough conviction to drive the break. The current consolidation channel is likely to remain intact.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.34610 and 1.35370.
- Support line of 1.33090 and 1.32330.
Commentary/ Reason:
Sterling was traded at $1.33713, dipped to its weakest level this year, and due for around 1% decline for the week.
The sharp rise in inflation prompted investors to boost bets that the Fed will raise interest rates sooner than expected.
In the UK’s GDP data showing Britain’s economy lagging rivals in the July-September period. It reported that the GDP grew 1.3% over quarter after 5.5% growth in Q2 when a faster growth at 1.5% was forecast. This is bearish for GBPUSD and underscored the interest rate dilemma facing the Bank of England.
The British pound also pressured after Britain and the European Union looked far from finding a post-Brexit agreement over Northern Ireland.
