INTRADAY TECHNICAL ANALYSIS 10 MAY (observation as of 06:50 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:

  1. The beaten down euro was a fraction higher at $1.05731 on Tuesday.

  2. Driving the price action in the single currency today was a drop in Treasury yields and a weaker U.S. dollar. Concerns of surging inflation pressures and slowing economic growth lifted the benchmark 10-year to its highest level since November 2018 overnight.

  3. The euro, however, remains pressed as market heeding concerns that further curtailing Russian oil imports following the nation's invasion of Ukraine could push some European nations into economic distress.

  4. Markets 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.

 EURUSD             

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.99472 and 1.00196.

-        Support line of 0.97129 and 0.96404.

Commentary/ Reason:

  1. The dollar was flat against the Swiss franc on Tuesday, trading at 0.99148 franc, just below the highest since 2019 that it records overnight.

  2. The greenback was still 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.

  3. China’s COVID-19 woes also grabbed some attention, with news of Shanghai’s lockdown measures kept traders anxious.

  4. 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.

  5. 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.

  6. Alternatively, in a case where USD/CHF remains bearish past 0.971, around 0.9640 will be crucial for the bears to track.

  7. Overall, USD/CHF bulls are likely to face headwinds, but the overall trend remains positive.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 131.864 and 133.123.

-        Support line of 129.346 and 128.087.

Commentary/ Reason:                                        

  1. The dollar was traded at 130.390 per yen, slightly lower than levels above 131.34 seen yesterday. It was flat against the Japanese yen, though is still very much in control, traded just below the two-decade high touched yesterday.

  2. The greenback ascends take a breather as the benchmark U.S. Treasury yields pause its climb.

  3. 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.

  4. 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.

  5. Intraday bias in USD/JPY turned neutral again as it retreated quickly after hitting the multi-year high 131.34. The bulls could regain dominance if the asset oversteps the mark, sending the pair at 131.864, followed by 133.123.

  6. Meanwhile, the RSI has shifted into a consolidation range of 40.00-60.00 from a bullish range of 60.00-80.00, which indicates a volatility contraction.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.24242 and 1.24803.

-        Support line of 1.22425 and 1.21863.

Commentary/ Reason:

  1. Sterling was little changed at $1.23586 on Tuesday.

  2. The pound’s bears take a breather as the U.S. dollar extends the corrective mode lower amid an improving market mood. U.S. Treasury yields, which have climbed sharply on expectations of aggressive tightening by the Fed, took a breather after Atlanta Fed President Raphael Bostic pushed back on suggestions of a massive 75-bps rate hike at the Fed's next meeting.

  3. Brexit and growth concerns, however, continue to linger. The pace of interest rates hikes fuelled recession fears in Britain where the BoE warned that dealing with an inflation over 10% will have dire consequences for the economy.

  4. Global recession fears, the slowdown in the Chinese economic activity and the worsening global inflation outlook on rising energy prices amid COVID lockdowns and the protracted Russia-Ukraine conflict force investors to seek refuge in the safe haven dollar.

  5. On the downside, 1.2245 aligns as the next bearish target. And a drop below that level, additional losses toward around 1.2186 could be witnessed.

  6. On the flip side, the descending line coming from May 5 forms the first resistance at around 1.2424, which is reinforced by a static level as well. Above that line could be seen as a bullish sign and open the door for a rebound toward 1.2480.

GBPUSD