INTRADAY TECHNICAL ANALYSIS 25 MAY (observation as of 08:15 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.07336 and 1.07861.

-        Support line of 1.05639 and 1.05115.

Commentary/ Reason:

  1. The euro retreated 0.43% to $1.06852, but remained near Tuesday's high of $1.07481, a level not seen since April 25, after ECB President Christine Lagarde said euro zone interest rates will likely be in positive territory by the end of the third quarter.

  2. Lagarde's comments implied an increase of at least 50 basis points to the deposit rate and fuelled speculation of bigger hikes this summer.

  3. Macroeconomic data however, put a halt to the recovery as it revived growth-related concerns. Most European manufacturing and services indexes came in below the market’s expectation. Traders also remained sceptical about the strength of the single currency due to the ongoing war in Ukraine along with the proposed Russian oil embargo still could aggravate the currency.

  4. Judgement reserved as traders waited for the results of the minutes from the Federal Reserve’s May policy meeting. Monetary policy outlooks have steered foreign-exchange markets this week, and traders will be looking for more clues about the pace of Fed tightening over the rest of this year when FOMC minutes of the last rate-setting meeting are released later today.

  5. The EUR/USD pair approached our waited extended target at 1.0733, showing some slight bearish bias now affected by stochastic negativity, waiting to get positive motive that assist to push the price to resume the positive trades to achieve the mentioned target.

  6. Bullish trend is generally suggested for the upcoming period unless breaking 1.0563 and holding below it, as breaking it will press on the price to attempt to return to bearish track again.

EURUSD

              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.97526 and 0.97997.

-        Support line of 0.96002 and 0.95531.

Commentary/ Reason:

  1. The dollar rebounded against the Swiss franc on Wednesday, advancing 0.33% at 0.96237.

  2. The dollar supported ahead of the FOMC minutes investors’ repositioning and reacted to the rebound in the U.S. Treasury yields.

  3. Central banks have been walking a tightrope, trying to regain control of decades-high inflation without causing painful recessions.

  4. The dollar also regained ground amidst investors’ positive mood, which lessen the demand for safe haven franc.

  5. Intraday bias in USD/CHF however stays mildly on the downside, which supports the continuation of our bearish overview efficiently in the upcoming period, paving the way to head towards our next correctional target below 0.9600 and 0.9553. The EMA50 supports the suggested bearish wave, taking into consideration that breaching 0.960 may also push the price to start recovery attempts and head to test 0.9752 areas before any new attempt to decline back.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 128.158 and 128.817.

-        Support line of 126.026 and 125.367.

Commentary/ Reason:                                        

  1. The dollar edged 0.32% higher against its Japanese peer, which is highly sensitive to moves in long-term Treasuries, to trade at 127.169 yen.

  2. Though the pair still weighed after sliding to a more than five-week low at 126.3647 yen in the previous session.

  3. The dollar strengthened Wednesday on stronger T-note yields after the 10-year T-note yield steadied today after dropped to a 3-1/2-week low yesterday.  A rebound in stocks also boosted the demand for the dollar.

  4. The widening policy divergence between Japan and the U.S. also kept downward pressure on the yen.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.26304 and 1.26770.

-        Support line of 1.24796 and 1.24330.

Commentary/ Reason:

  1. Sterling was flat to $1.25370.

  2. Sentiment in the foreign exchange market remains guarded as the US Federal Reserve will continue to remain hawkish in its monetary stand, a dynamic that will be elaborated further in the FOMC meeting minutes to be published on Thursday.

  3. Traders also remain anxious and speculated. The potential negative impact of the ongoing Russia-Ukraine conflict on the UK economy, renewed Brexit concerns make it difficult for GBP/USD to go into a steady recovery in the near term.

  4. The GBP/USD pair’s decline stopped at the correctional bullish channel’s support line that appears on the chart, waiting to rebound bullishly to resume the bullish trend on the intraday basis, which its targets begin by breaching 1.2630 to open the way to head towards 1.2677 as a next positive station.

  5. Therefore, we expect to witness positive trades in the upcoming sessions unless breaking 1.2479 and holding below it.

GBPUSD