INTRADAY TECHNICAL ANALYSIS 6 JANUARY (observation as of 06:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.13239 and 1.13436.
- Support line of 1.12601 and 1.12404.
Commentary/ Reason:
The euro held steady at $1.13090.
Although a jump in the 10-year T-note yield to a 9-month high of 1.709% was supportive for the dollar, a hawkish ECB comments on Wednesday boosted the EUR/USD.
The 10-year German bund yield rose to a 2-month high of -0.077% Wednesday, strengthening the euro’s interest rate differentials. While ECB Governing Council member Kazaks said the ECB would take action if the inflation outlook picked up and will cut stimulus and raise interest rates if necessary.
Concerns over Europe's slowing economic growth on the back of surging prices and rising COVID cases mounted.
The EUR/USD continues to trade within a bearish channel, although the short-term trend of recent weeks saw the pair trading on a tight range between 1.124 and 1.134. The 14-day RSI is inching lower below the midline, suggesting that the downside bias remains intact.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.91997 and 0.92227.
- Support line of 0.91253 and 0.91023.
Commentary/ Reason:
The dollar rose 0.22% higher on Thursday to trade at 0.91792 franc.
The U.S. dollar was strengthened after US Treasury yields recover from earlier losses, after the Fed meeting minutes came in more hawkish than expected
Fed rate-hike concerns and virus updates were catalysts for the next pair movement.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 116.387 and 116.636.
- Support line of 115.580 and 115.330.
Commentary/ Reason:
The dollar hovered near a five-year high to the yen on Thursday, supported by a surge in U.S. Treasury yields on hawkish rhetoric from Fed official and a strong U.S. jobs report.
It stood at 115.878 yen, little changed from Wednesday.
Central bank divergence also was weighing on the yen with the Fed tapering QE and expected to raise interest rates well before the BOJ does.
Intraday bias in USD/JPY remains neutral for consolidation below 116.387 temporary top. Some consolidations could be seen but downside should be contained above 115.58.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.35762 and 1.36140.
- Support line of 1.34548 and 1.34160.
Commentary/ Reason:
The pound traded lower against the U.S. dollar on firmer buying support for the greenback, backed by better US employment data and following the Fed minutes and anticipation of faster policy tightening.
Sterling now traded at $1.34274, after retreating overnight from a nearly two-month high of $1.3581.
The losses, however, were limited as the UK on Tuesday ruled out any new coronavirus-related restrictions, with Prime Minister Boris Johnson saying that the country has "a chance to ride out this Omicron wave" without another lockdown. Traders reckoned that the surging Omicron cases in Britain won't deter the Bank of England from lifting rates.