INTRADAY TECHNICAL ANALYSIS AUGUST 12 (observation as of 08:20 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.03925 and 1.04561.
- Support line of 1.01864 and 1.01227.
Commentary/ Reason:
The euro was down 0.25% to $1.02937. In a mixed start, the euro rose to an early high of $1.03372 before falling to a low of $1.02912.
The pair however is still set for 1.36% weekly gains.
Dollar regains slight momentum as T-note pulled back. The yields moved higher and hovered near a three-week peak as Fed officials downplayed the CPI report and indicated that the Fed will continue to raise interest rates.
Meanwhile Europe’s energy crisis, regional economic weakness, and the ECB’s reluctance to hike rates aggressively have created headwinds for the common currency, limiting its upside performance against the greenback.
The EUR/USD pair try to test 1.0392 resistance and couldn’t manage to breach it, to head towards starting expected bearish wave in the upcoming period, and the targets start by breaking 1.0186 and confirm opening the way to head towards 1.0122.
Bearish bias will be suggested for today, taking into consideration that breaching 1.0392 will stop the negative scenario and lead the price to achieve new gains.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.95475 and 0.96053.
- Support line of 0.93605 and 0.93027.
Commentary/ Reason:
The dollar rose marginally at 0.94126 on Friday session, still set for around 2.20% weekly losses after it touched a 3-month low on Thursday.
Dollar struggles to regain inflation-induced losses, after the U.S. inflation data coming in less hot than feared and sending the dollar tumbling. Investors expect the U.S. Federal Reserve will not have to maintain its eye-wateringly steep pace of interest rate hikes, which had been supporting the dollar.
In an economic data, Swiss unemployment figures remained at a 21-year low of 2% in July for the third consecutive period, pointing to a robust job market that gives space for the SNB tighten monetary policy.
Previously, reports circled that policymakers are considering a 50bps-75bps rate hike for the central bank’s next meeting, extending its recent tightening pivot to curb inflation that lingers above the central bank’s target of 0-2%. The latest Swiss CPI figures showed an annual inflation fate of 3.5% in July, stagnating from the previous month for the first time since December and suggesting inflation may have peaked.
The USD/CHF pair continues to fluctuate and keeps its stability, to keep the bullish trend scenario active, supported by stochastic current positivity, waiting to visit 0.9547 initially.
Continuation of the bullish wave requires holding above 0. 9547, as breaking it will put the price under new negative pressure and open the way to head towards 0.9360 as a next negative target.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 135.420 and 136.671.
- Support line of 131.372 and 130.121.
Commentary/ Reason:
The dollar strengthened 0.20% to 133.240 per yen after fallen as far as 131.734 overnight to a one-week low.
The Japanese yen fell the most against a resurgent U.S. dollar on Friday, as a two-day rally in equities conceded to market expectations that the Fed will have to do a lot more to contain inflation.
That realisation followed speeches and statements from a bunch of Federal Reserve officials warning investors against being sanguine after this week's slight softening in inflation numbers.
The divergent monetary policy stance adopted by the Fed and the Bank of Japan, also should lend some support to the USD/JPY pair.
A fresh leg down in the U.S. Treasury bond yields meanwhile narrows the U.S.-Japan rate differential and benefits the Japanese yen, which, in turn, exerts downward pressure on the USD/JPY pair.
The USD/JPY pair bounced bullishly, starting today with bullish bias to attempt to surpass 135.420 level, which hints the attempt to regain the bullish trend, but the price faces negative factors coming by the EMA50 and stochastic.
Contradiction between the technical factors makes us stay aside until the price confirms its situation according to the mentioned level, trading below represents the key to reactivate the correctional bearish scenario that its next target located at 131.372.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.23167 and 1.23977.
- Support line of 1.20547 and 1.19737.
Commentary/ Reason:
Sterling was last trading at $1.21718, down 0.22% on the day, though still set for 1.08% weekly gains.
Looking at the fundamentals facing the UK economy as well as the message relayed from the BoE, recessionary fears remain at the forefront of everyone’s minds. This heightens the impact of UK GDP print due later today and anything less than expected could likely result in pound depreciation, thus amplifying recession fears in the region.
