INTRADAY TECHNICAL ANALYSIS 14 OCTOBER (observation as of 05:20 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.16186 and 1.16459.
- Support line of 1.15303 and 1.15031.
Commentary/ Reason:
The euro was mostly flat against the dollar, traded at $1.15919, but earlier touched $1.1601 for the first time since Oct. 5.
A modest dollar weakness amid a decline in T-note yields seems to be helping EUR/USD recovery. Although decline in the dollar were pared, as the minutes of the Sep 21-22 FOMC meeting were supportive for the dollar. FOMC policymakers carry on with persuading markets that they will start reducing asset purchases as soon as November.
The EUR/USD has begun a bullish recovery which has taken price action back towards the 1.161 resistance line. A break would give weight to the rally and a likely reversal.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.93083 and 0.93389.
- Support line of 0.92093 and 0.91787.
Commentary/ Reason:
The dollar slipped to a one-week low against the Swiss franc on Thursday, traded at 0.92234.
A decline in T-note yields on Wednesday sparked long liquidation pressure in the dollar.
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.
The USD/CHF has plummeted back towards the 0.922 support level as a sharp rise in selling pressure in yesterday’s trading, failed to preserve the previous session’s upside momentum. The USD/CHF pair 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.
[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:
The dollar edged 0.27% higher to 113.552 yen, but back from the three-year peak of 113.799 yen hit overnight.
The U.S. Fed move to start of tapering of its massive bond-buying hawkish and bullish for the dollar. Although, 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.
The USD/JPY pair has begun a pullback with a rise in selling pressure in early Asian trading day, yet price action indicates that bullish momentum is revived, and another test of the 113.93 resistance line is underway. Repeated tests increase the probability of a break. The next few trading sessions will determine whether the move is a reversal or a retracement of the rally.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.36957 and 1.37320.
- Support line of 1.35783 and 1.35420.
Commentary/ Reason:
Sterling was little changed at $1.36629, holding Wednesday’s 0.53% advance and near its highest level this month.
British pound rose on signs of life on renewed Brexit optimism. EU will reportedly offering "very far-reaching" changes to resolve the issue surrounding the movement of UK goods, including medicine.
Meanwhile, the data from the UK revealed that the GDP grew by 0.4% on a monthly basis in August, as well as a robust pace of expansion in Industrial Production and Manufacturing Production.
The GBP/USD pair has finally broken the 1.360 resistance line after several failed attempts. Intraday bias in GBP/USD remains neutral as sideway trading continues.
