INTRADAY TECHNICAL ANALYSIS 13 OCTOBER (observation as of 06:00 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.16028 and 1.16436.

-        Support line of 1.15212 and 1.14804.

Commentary/ Reason:

  1. The euro rose 0.20% to $1.15524 on Wednesday, still well within sight of the previous session's $1.15243, its lowest in 15-month months.

  2. The euro was weighted after the ZEW indicator of economic sentiment in Germany slipped for the fifth month, showing supply bottlenecks holding back recovery in Europe’s largest economy. Losses however were contained by signs of rising price pressures that are hawkish for ECB policy after the German Sep wholesale price index rose in the fastest pace of increase in 47 years.

  3. The EUR/USD has flattened at the current price level, as bullish attempts have lacked the conviction to drive a rally. A longer-term bearish bias is well-established and significant bullish conviction will be required to overcome the current long-term trajectory.

  4. Traders will focus on consumer price data later today for further insight into the timing of higher rates. Divergent central bank policies supported the dollar against G-10 currencies, with the Fed expected to taper QE before other global central banks.

  5. Also on the calendar are final figures for German inflation in September and Eurozone industrial production in August Wednesday, and Eurozone trade data for August Friday.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93287 and 0.93528.

-        Support line of 0.92505 and 0.92264.

Commentary/ Reason:

  1. The dollar was flat against the Swiss franc on Wednesday, at 0.92942, remains confined in a one-week-old trading range.

  2. A softer tone surrounding the U.S. Treasury bond yields today weaken the liquidity demand for the dollar. That said, prospects for an early policy tightening by the Fed should assist the greenback to attract some dip-buying and lend some support to the USD/CHF pair.

  3. Meanwhile, concern about stagflation kept a lid on the optimism and tempered investors' appetite for perceived riskier assets, hence benefitting the safe-haven Swiss franc and keep a lid on any meaningful upside for the pair.

  4. The USD/CHF pair failed to preserve the previous session’s upside momentum, and has been oscillating in a narrow trading band over the past one week or so. This constitutes the formation of a rectangle on short-term charts and points to indecision amid traders over the pair's near-term trajectory.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 113.936 and 114.245.

-        Support line of 112.934 and 112.625.

Commentary/ Reason:                                        

  1. The dollar pulled back versus the Japanese yen on Wednesday, eased 0.12% to 113.469, though still hovering just below the to a three-year high touched yesterday.

  2. The spike in U.S. yields prompted investors to dump the Japanese yen versus the dollar since early in the week, pushed the greenback high.

  3. However, a softer tone surrounding the U.S. Treasury bond yields today lend breathing ground for the yen. In keeping with concerns that soaring prices could crimp economic activity and prompt central banks to raise interest rates down the road, the yield curve flattened, and benchmark 10-year yields retreated.

  4. Investors however, remained confident the U.S. Federal Reserve will announce a tapering of its massive bond-buying next month despite softer U.S. payrolls figures.

  5. The USD/JPY pair has begun a reversal with a rise in selling pressure in early Asian trading day. The next few trading sessions will determine whether the move is a reversal or a retracement of the rally.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.36725 and 1.37077.

-        Support line of 1.35588 and 1.35237.

Commentary/ Reason:

  1. Sterling started the day on a firm footing, rose 0.25%, to $1.36174, though still meandered in the middle of this month's range.

  2. The pound gained on growing expectations that the Bank of England could raise interest rates to curb soaring inflation. Two Bank of England officials moved to reinforce signals of an imminent rise in UK interest rates, with one telling households to brace for a “significantly earlier” increase than previously thought.

  3. Brexit concerns, however, continue to limit the GBP's gains. The pair also remains cautious by the broad-based U.S. dollar strength.

GBPUSD