INTRADAY TECHNICAL ANALYSIS 9 MAY (observation as of 08:45 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.06617 and 1.07159.
- Support line of 1.04863 and 1.04321.
Commentary/ Reason:
The euro fell 0.3% to $1.05094, and just a whisker above its recent five-year lows of $1.04712.
The euro was broadly lower against the US dollar as risk-off sentiment continued to dominate the local note's direction. Russian oil import ban from the EU also is not helping the case for the euro as growth forecasts continue to fade.
The dollar was supported by U.S. economic outperformance and weaker equity prices. Surging inflation, the war in Ukraine, and tighter lockdowns against COVID-19 in Beijing and Shanghai, have left investors uncertain on many counts, thus flocking to the safe haven.
Giving added impetus to dollar upside, the U.S. 10-year Treasury yield extends its climb higher leaving 2018 highs vulnerable.
As observed on the daily chart, EUR/USD is extending its latest leg down towards the last week’s demand area just above 1.0486. If that support cracks, then a fresh downswing towards the falling trendline support of 1.0432 will be inevitable.
The 14-day RSI is inching lower below the midline, currently sitting just above the oversold territory, allowing room for more declines.
Market will look forward to U.S. inflation data on Wednesday as the next possible upside risk event for the dollar. Until then, the economic calendar is filled with Fed speeches which can provide some price fluctuation on the pair with an increasingly hawkish tone expected from many contributors.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.99472 and 1.00196.
- Support line of 0.97129 and 0.96404.
Commentary/ Reason:
The dollar rose 0.5% to its highest since 2019 on the Swiss franc and was last stood at 0.99247 franc.
The greenback was sent ahead against other havens, commodity currencies and emerging market currencies alike.
A sharp stocks selloff today boosted demand for the safe-haven currency dollar and as the Federal Reserve was seen as tightening monetary policy faster and more than peers.
China’s COVID-19 woes also grabbed some attention, with news of Shanghai’s lockdown measures kept traders anxious.
In the meantime, EU’s plans to phase out imports of Russian oil over its war in Ukraine, pressuring Europe's energy security, inflation, and growth.
The USD/CHF pair resumes its positive trading clearly to support the continuation of the expected bullish trend scenario on the intraday and short-term basis, noting that the next target rises to 0.9947. Overbought RSI conditions will challenge the quote’s further upside.
Alternatively, in a case where USD/CHF remains bearish past 0.971, around 0.9640 will be crucial for the bears to track.
Overall, USD/CHF bulls are likely to face headwinds, but the overall trend remains positive.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 131.930 and 133.048.
- Support line of 128.314 and 127.196.
Commentary/ Reason:
The dollar was very much in control against the Japanese yen at 131.082, a fresh two-decade top.
The dollar began the week on a strong footing, buttressed by sharply rising U.S. yields and by investors' tilt toward safety as lockdowns in China, war on the edge of Europe and fear about higher interest rates that sent a nervous jolt through markets.
The benchmark U.S. Treasury yields resumed their climb, as it hit their highest since November 2018, placing it at the vanguard of hawkish global central banks.
Meanwhile BoJ's stubborn commitment to it zero-rate programme puts it at odds with major central banks that are shifting toward tighter monetary policy, further weighed on the yen.
The USD/JPY pair shows more bullish bias and continues the attempt to return to the bullish channel, supported by the EMA50 that continues to carry the price from below, approaching our first waited positive target at 131.930, and surpassing this level is suggested to head towards 133.0 as a next station. Therefore, we will continue to suggest the bullish trend for the upcoming period.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.26309 and 1.27493.
- Support line of 1.22478 and 1.21293.
Commentary/ Reason:
Weighed by the Bank of England's gloomy outlook, sterling fell 0.5% to its lowest since mid-2020 earlier in the day and was last traded at $1.22830.
The pace of interest rates hikes is already fuelling recession fears in Britain where the BoE warned that dealing with an inflation over 10% will have dire consequences for the economy.
The dollar meanwhile was on the front footing on Monday as investors turned to their favourite safe haven as the war in Ukraine and COVID-19 lockdowns in China continued to weigh on global growth. A slump in stocks and soaring T-note yields Monday also boosted some safe-haven buying of the greenback.
