INTRADAY TECHNICAL ANALYSIS 18 MAY (observation as of 05:20 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.21776 and 1.21948.
- Support line of 1.21220 and 1.21048.
Commentary/ Reason:
Against the euro, the dollar traded at $1.21643, its weakest since last Tuesday.
A faster pace of vaccine inoculations in the Eurozone is supporting gains in EUR/USD along with higher German bund yields.
The dollar dwindled as Treasury yields stalled amid renewed expectations that the U.S. will not hike interest rates anytime soon. Some investors were already scaling back expectations for a Fed rate hike this year, and Kaplan’s comments gave traders even more incentive to sell the dollar.
This week a host of Fed policymakers are scheduled to speak, and the U.S. central bank will also release minutes from its most recent meeting, which may give indications about where monetary policy is headed this year.
However, the growing consensus is that the Fed will tolerate what it sees as a temporary acceleration in inflation, which will keep the dollar lower.
The EUR/USD is moving towards the 1.217 price line which represents a strong resistance area for the pair which in recent trading, buyers have been unable to overcome. A clear uptrend has formed with a sharp exponential indicating sentiment is firmly bullish. A break seems imminent. Momentum indicators are bullish.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.90449 and 0.90595.
- Support line of 0.89975 and 0.89829.
Commentary/ Reason:
The dollar traded lower against the Swiss franc on Monday, slipped 0.12% to trade at 0.90213.
The dollar was weighted by the inflation worries, and lower U.S. Treasury yields.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.41957 and 1.42677.
- Support line of 1.40517 and 1.39797.
Commentary/ Reason:
The British pound rose to $1.41728 to reach its strongest since late February against the U.S. dollar today as the latter has been trading broadly weaker in the wake of last week's sub-par U.S. retail sales data.
The sterling, meanwhile, has been buoyed recently as investors cheer the gradual lifting of strict coronavirus restrictions after a 4-month COVID lockdown.
The UK ministers will decide on June 14 about whether to proceed with the final phase of lockdown easing in England, health minister Matt Hancock said on Sunday, describing the pandemic as "under control".
The GBP/USD pair has broken the around 1.415 resistance level, which is significant, considering the pair has rejected this price line on several previous occasions. The question is whether the break can be sustained as bullish momentum is weak. Momentum indicators suggest that the pair is overbought.
