INTRADAY TECHNICAL ANALYSIS 22 SEPTEMBER (observation as of 05:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.17496 and 1.17633.
- Support line of 1.17055 and 1.16919.
Commentary/ Reason:
The euro changed hands at $1.17201 on Wednesday, little moved from opening today having stabilised following the one-month low of $1. 16999 on Monday.
Gains in the pair were limited by inflation comments from ECB Vice President Guindos suggesting he may favour maintaining current ECB stimulus measure when he said underlying inflation in the Eurozone is clearly below the ECB's target.
European Central Bank policymakers still see the recent inflation surge as temporary, but a growing number appear to be acknowledging the risk that price growth may exceed their relatively benign projections.
Gains in the dollar were limited by subdued T-note yields, as market participants remain cautious on the upcoming U.S. Fed announcement on monetary policy. The U.S. central bank will provide an update on Wednesday, although expectations for a surprise are pretty much null.
The EUR/USD has stalled at the 1.170 support level as a series recent trading indicate indecision. Sellers appear to lack the conviction to continue the sell-off, yet buyers also appear to lack the appetite to drive a rally. Further down, 1.169 is eyed.
And on the upside, next test will be the 1.174 resistance line, followed by 1.176.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92857 and 0.93103.
- Support line of 0.92060 and 0.91813.
Commentary/ Reason:
The dollar rose Wednesday, added 0.10% on the day to 0.92440 franc as investors focused on two key risks - a default by Chinese property developer Evergrande and the expected pace of U.S. monetary policy tightening.
The dollar is holding its value as traders awaited guidance from the U.S. Federal Reserve regarding the bond-buying programme. The FOMC’s 2-day policy meeting could provide clues as to when the U.S. central bank will start withdrawing its asset purchases. Reduced central bank stimulus tends to lift bond yields, which also helps boost the dollar.
The Swiss franc meanwhile holds some ground on its safe-haven appeal amid risk aversion on the rapid spread of the Delta variant of the coronavirus and China’s Evergrande liquidity risk.
The USD/CHF pair faced strong negative pressure yesterday. Breaching 0.9285 will reactivate the positive scenario that its next target located at 0.9310, while continuing the decline and breaking 0.9206 will press on the price to turn to decline, to head towards 0.9181.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.36964 and 1.37170.
- Support line of 1.36296 and 1.36090.
Commentary/ Reason:
Sterling last traded at $1.36549 against the U.S. dollar today, cautiously traded on the increasing risk-off mode, which has become prevalent ahead of the U.S. Fed’s meeting decision today.
The possibility of the tapering of asset purchases by the U.S. Fed raised the appeal of the greenback and hence was likely to weaken the pound.
The Bank of England meanwhile will announce a policy decision on Thursday. The BoE is expected to leave policy settings unchanged, but traders see potential for gains in the currency if the bank adopts a hawkish tone or more members being calling for asset purchase tapering.
The GBP/USD pair keeps trading near its September low, and the near-term picture indicates that the risk is skewed to the downside. A test of 1.3629 is on the cards, while a break below the level should lead to a steeper decline.
