INTRADAY TECHNICAL ANALYSIS 11 APRIL (observation as of 08:20 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.09676 and 1.10328.
- Support line of 1.08372 and 1.07720.
Commentary/ Reason:
The euro was flat against the broad dollar strength, last bought $1.08818 on Monday.
It held its own in relief that the far right did not win the first round of French presidential elections. French leader Emmanuel Macron and challenger Marine Le Pen qualified on Sunday for what promises to be a tightly fought presidential election runoff on April 24.
A Le Pen victory could send shockwaves through France and Europe in ways similar to Britain's vote in 2016 to leave the EU.
Higher U.S. yields meawhile boosted the dollar on the day, bolstered by prospects of aggressive rate hike. The 10-year T-note yield rose to a more than 3-year high.
The first major resistance for the pair is near the 1.0967 level, with more gains might send the pair towards the 1.1032 level in the coming sessions. On the downside, an immediate support will be near the 1.0837 level, and the next support at around 1.0772 level.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.93841 and 0.94451.
- Support line of 0.92621 and 0.92011.
Commentary/ Reason:
The dollar remains elevated against the Swiss franc on Monday, trading at 0.93448.
The jump in U.S. bond yields has boosted the dollar, with U.S. Fed officials remained consistent in their monetary tightening stand. The U.S. dollar also continued to march higher as risk aversion remained prevalent as Western allies are expected to up the ante on their sanctions against Russia.
The USD/CHF pair attempts to breach 0.938 level, reinforcing the expectations of extending the bullish wave on the intraday and short-term basis, noting that the next positive target is located at 0.9445.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 125.277 and 126.204.
- Support line of 122.277 and 121.350.
Commentary/ Reason:
The Japanese yen suffered the most selling as investors saw little reason to exit bets against the yen while the Bank of Japan holds yields near zero.
It was sitting 0.73% weaker at 125.191, slumped to a level not seen since June 2015.
The main casualty for the yen was as the BoJ remains dedicated to keeping its policy super-loose and bond yields near zero.
Adding to this, the widening of the US-Japanese government bond yield differential drove flows away from the JPY and acted as a tailwind for spot prices amid sustained dollar buying interest.
And in a quarterly report analysing regional Japanese economies earlier today, the central bank offered a bleaker view than in January for eight of the country's nine regions as a resurgence in COVID-19 cases and lingering supply constraints hit growth. BoJ Governor Haruhiko Kuroda said the national economy continues to pick up but warned of the potential fallout from rising commodity costs and the war in Ukraine.
The BOJ's quarterly regional report will be among factors the central bank will scrutinise in releasing fresh quarterly growth and inflation projections at its next policy meeting on April 27-28.
Sudden spike over the past hour or so could be attributed to some technical buying above the 125.00 psychological mark. A subsequent move beyond the previous YTD high area could be seen as a fresh trigger for bullish traders and might have set the stage for additional gains. That said, overbought conditions on the daily chart warrant caution. Investors might also refrain from placing aggressive bullish bets ahead of the US CPI report on Tuesday.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.31746 and 1.32460.
- Support line of 1.39434 and 1.28720.
Commentary/ Reason:
Sterling was flat on Monday, at $1.30335 and hovering just above the low end touched on Friday.
Investors’ sentiment towards the pound is negative, as shown by European and U.S. equities falling. Factors of Russia-Ukraine war, and the global central bank’s tightening monetary conditions in the middle of an elevated inflation scenario paint an ugly outlook for Q2 2022. The BoE had delivered its third straight rate hike in March, bringing borrowing costs to pre-pandemic levels.
Focus now shifts to the U.S. inflation and UK GDP due for release later this week.
Nevertheless, the greenback holds to gains, boosted by its safe-haven status.
The GBP/USD currency pair reached the psychological level of 1.3000. This move indicates a high interest of traders in short positions, which in the long term will accelerate the downward move.
