INTRADAY TECHNICAL ANALYSIS 21 DECEMBER (observation as of 05:55 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.13282 and 1.13613.
- Support line of 1.12208 and 1.11877.
Commentary/ Reason:
The euro found support on weakness in the dollar. The euro was last seen trading in the positive territory on Tuesday at $1.12805.
The dollar was weighed down by concern that the pace of U.S. economic growth may falter after Senator Manchin rejected President Biden’s economic plan, along with the fiscal stimulus it would provide.
Meanwhile a higher German bund yields strengthened the interest rate differentials of EUR/USD.
A negative for the euro was the projection from the German Bundesbank that the German economy may contract in Q4 due to the resurgence of COVID-19 infections. The Omicron variant's surge in Europe has led to more countries imposing tighter curbs, including Britain and the Netherlands. Netherlands had begun a fourth lockdown and other European nations considered Christmas restrictions.
Outlook in EUR/USD remains unchanged and intraday bias remains neutral. The bearish potential looks alleviated but not completely out, as the RSI indicator on the daily chart rebound toward the 50 area.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92571 and 0.92811.
- Support line of 0.91795 and 0.91555.
Commentary/ Reason:
The greenback rose 0.20% against the Swiss franc, to trade at 0.92160 franc on Tuesday.
The pair jumped as U.S. Treasury yields recovered some ground, but it faces resistance at the 50-hour SMA at 0.9215.
Risk-aversion in the financial market, spurred by the Omicron outbreak and U.S. domestic political issues, allowed the Swiss franc to hold on to its safe-haven status, weighing on the greenback.
The USD/CHF daily chart depicts that the pair have remained in consolidation for more than 2-weeks, in the 0.917-0.925 range, sometimes piercing through price extremes, like the December 15 high at 0.9293. At press time, outlook in USD/CHF is unchanged and intraday bias stays neutral first.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.080 and 114.356.
- Support line of 113.190 and 112.914.
Commentary/ Reason:
The dollar strengthened slightly to 113.702 per yen, with worries about the Omicron coronavirus variant kept risk currencies in check.
U.S. Treasury yields rose slightly, as investors grew concerned that omicron COVID variant will derail the recovery.
The yen also was weighted after the Nikkei Stock Index rose more than 2% on early trade today.
The Japanese yen hold its safe haven status, but still trading near the middle of the trading range of the past three weeks. The USDJPY pair continues to hover within the sideways range that its lines represented by 113.19 support and 114.08 resistance, to continue suggesting the sideways move until breaching one of the mentioned levels.
Divergent monetary policies continued to influence the currency’s movement, on hawkish Fed against the BoJ ultra-loose policy.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.32363 and 1.32820.
- Support line of 1.31797 and 1.31340.
Commentary/ Reason:
The pound managed to recover some grounds on a slight improvement in demand despite lingering fears over the Omicron variant of COVID-19, which is currently spreading both in the country and globally.
Support from BoE interest rate decision last week proved to be short-lived as traders focused on coronavirus data from UK.
Omicron infections, which are multiplying rapidly across Europe and the United States, and doubling every two or three days in London and elsewhere, caused a sharp sell-off in share markets. The British Prime Minister Boris Johnson said on Monday he would tighten coronavirus curbs to slow the spread of the Omicron variant if needed.
The fear of new restrictions may put additional pressure on the British pound in the upcoming trading sessions.
The pound now is steady at $1.32155.
