INTRADAY TECHNICAL ANALYSIS DECEMBER 20th (observation as of 08:00 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.10087
- Support line of 1.09346
Commentary/ Reason:
1. The pair gained tremendously last week due to the federal reserve decision to hold rate and dovish talks in future fiscal policy move that saw the price up 1% in a single hourly candle although the surge are capped by profit taking and seemingly overextension of equity gain.
2. Even though the difference in interest rates between German and U.S. government bonds went down a little, it didn't matter much because there was still a lot of enthusiasm for risks in the equity markets as ECB cuts are expected to come later than the fed.
3. The market is putting the inflationary indicator, PCE Price index, in focus as well as other slurry of data such as GDP and consumer sentiment to gauge the rate cut timing and pacing while there is no significant data coming out of eurozone.
4. The price is expected to be lower at support before gaining momentum toward previous week’s high as the dollar have already established a higher low in the short term.
5. Technical indicators are mixed with more selling than buying and some neutral while moving average are holding mostly buy after a strong uptrend since last week.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.86304
- Support line of 0.85928
Commentary/ Reason:
1. The pair had moved in a steady downtrend to a 5 months low starting weak at Monday’s opening, breaking its support from Friday last week which now saw a small support that may hold the price higher before gaining more momentum downward.
2. the Swiss National Bank continued supporting the franc by selling key foreign currency reserves, mitigating the impact of volatile commodity prices and import inflation - a key strategy to combat heightened price growth in Europe even so now that red sea closure escalated.
3. Although there is no substantial economic events from the swiss, slurry of economic data are coming from the US notably PCE Price Index, new home sales, and durable goods orders.
4. The price is expected to recover to nearest resistance or even higher at Fibonacci level of 61.8% before continuing its downward movement although it is more likely that it will continue once profit taking volume is over.
5. Technical indicators are mixed with more selling than buying and some neutral although moving averages are sell.
[USDJPY]
Important Levels to Watch for:
- Resistance line of 144.296
- Support line of 143.147
Commentary/ Reason:
1. The pair have moved in a wide volatile range that suggest a steady movement downward, a sign of recovering yen after it hover around dangerous waters for a couple of week in conjunction with weakening dollar.
2. BoJ in its recent two-day meeting maintained its ultra-loose monetary policy with no changes to interest rates or bond yield targets, and Governor Kazuo Ueda expressed a dovish stance, signalling a readiness for additional easing measures if necessary, despite earlier speculations about a potential rate hike that were later dismissed by BOJ officials..
3. While there is no significant data coming out of Japan, the US is preparing for its fed-sensitive PCE Price index data and other slurry of economic data that may affect its currency.
4. The price is expected to temporarily fell into its nearest support before having the potential momentum to go on a short recovery and the eventual follow-up of its long-term trend.
5. Technical indicators are mixed with more sell than buy and neutral while longer term moving averages are mixed between long-term, medium-term, and shorter term.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.26128
- Support line of 1.27049
Commentary/ Reason:
1. The pair have been moving in a volatile wide range fashion as price broke its strong resistance last week to a 4 months high that immediately retreated to 50% of its gain on Monday in an uncertainty of central banking rate move.
2. Sterling declined Wednesday as British inflation in November fell below expectations, prompting markets to advance predictions of Bank of England interest rate cuts, with a full pricing of a 25-basis point cut by May 2024 and almost a 50% chance by March, challenging previous expectations of the BoE's relative hawkishness compared to other major central banks.
3. There is a GDP and retail sales data coming from the UK while there is important slurry of economic data coming from the US.
4. The price is expected push downward after testing its support level before having the momentum to test its resistance level if at all because it’s unlikely unless recent economic data shines light onto the sterling which are not coming until Friday.
5. Technical indicator is pointing toward sell while moving averages are also pointing towards sell except the long-term averages.
