INTRADAY TECHNICAL ANALYSIS 7 JULY (observation as of 05:40 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.18965 and 1.19310.
- Support line of 1.17850 and 1.17506.
Commentary/ Reason:
The euro dropped back to $1.18268, near its lowest since March.
Disappointing data out of Europe dented the euro towards a 3-month low against the dollar.
Investor sentiment in Germany, the eurozone's biggest economy, remains at a high level but fell sharply in July, the ZEW economic research institute reported, while data showed orders for German-made goods posted their sharpest slump in May since the first lockdown in 2020.
ECB policymakers are also in the middle of debating a new strategy, with many now backing the notion of letting inflation surpass 2% for a while after it lagged below that level for most of the past decade.
Traders now positioned themselves and waited ahead of the release of the minutes from the U.S. Federal Reserve's pivotal June meeting, when quantitative easing might be tapered. It will be released later today.
The EUR/USD has broken the previous support level. The return towards recent price lows suggest considerable bearish sentiment has overcome the pair. The next support level exists at the 1.175 price line. Momentum indicators are testing oversold conditions.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92702 and 0.92950.
- Support line of 0.91898 and 0.91650.
Commentary/ Reason:
The dollar hovered just above the opening price against the Swiss franc on Wednesday, traded at 0.92330.
Minutes of the Fed’s June policy meeting due later is awaited, which might show how serious members were about tapering their asset buying and how early hikes could begin.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.39034 and 1.39523.
- Support line of 1.37452 and 1.36963.
Commentary/ Reason:
Sterling rose 0.14% against the dollar at $1.38114 after having hit a 1-week high of $1.38974 overnight.
The optimism came as markets looking forward to England becoming the first major country to formally start living with the coronavirus by dropping COVID-related curbs in two weeks' time. It also set to relax self-isolation rules for people in England who’ve had both doses of the COVID-19 vaccine.
Demand for pound also increased amid better PMI data from UK. The IHS Markit said the index reached 62.4 points in June, thanks to the sharp rise in new orders.
The buying pressure also expected to persist in risky assets, at least until the publication of the minutes of the Federal Reserve's June meeting later today. The notes will bring more clarity to the future actions of the central bank, especially on the quantitative easing program.
