INTRADAY TECHNICAL ANALYSIS 15 OCTOBER (observation as of 05:40 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.16412 and 1.16837.
- Support line of 1.15562 and 1.15137.
Commentary/ Reason:
The euro rose 0.10% to $1.16087, hovered just below the $1.16240 on Thursday for the first time since Sept. 4.
The broad selling pressure surrounding the greenback allowing the euro to head to some 0.23% gains for the week.
The euro is trading higher in reaction to lower Treasury yields and a weaker U.S. dollar. The price action suggests short-covering and profit-taking is taking place after minutes from the FOMC’s September meeting, released Wednesday afternoon, showed that the central bank could begin the tapering process in mid-November or mid-December.
A rally in the S&P 500 to a 2-1/2-week high Thursday also reduced the liquidity demand for the dollar.
The EUR/USD pair faces solid resistance at 1.161 and finds difficulty to breach it. A break will confirm a price recovery is underway and the return to a previous consolidation range.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92589 and 0.92788.
- Support line of 0.91944 and 0.91744.
Commentary/ Reason:
The dollar was flat against the Swiss franc on Friday, traded at 0.92292, bounced off the one-week low recorded yesterday.
A decline in T-note yields had 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 the upside for the pair.
The USD/CHF showed some bullish bias and head towards potential test to the key resistance 0.925. The RSI, however, is at 47, edging slightly low, indicating that USD/CHF could have another leg down.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.051 and 114.299.
- Support line of 113.250 and 113.003.
Commentary/ Reason:
The Japanese yen traded at 113.987 per dollar, still weaker than levels below 112.8 seen against the greenback earlier this week.
The dollar managed to maintain the momentum against the Japanese yen of the past five weeks, rising 0.27% on Friday and touching a high 113.952 yen for the first time since December 2018.
The greenback had rallied since early September on expectations the U.S. central bank would tighten monetary policy more quickly than previously expected amid an improving economy and surging energy prices.
The yen also fell further after a rally in the Nikkei Stock Index reduced the safe-haven demand for the yen.
The USD/JPY pair has moved beyond previous resistance zone price line. The break confirms strong bullish sentiment and the continuation of a sharp rally that started at the beginning of October. RSI however testing overbought conditions, suggesting that the rally likely won’t last.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.37342 and 1.37640.
- Support line of 1.36378 and 1.36080.
Commentary/ Reason:
Sterling was steady at $1.36825 on Friday, following its climb to the highest since Sept. 24 at $1.3734 overnight.
British pound was supported on the renewed Brexit optimism. EU reportedly offering 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% in August, as well as a robust pace of expansion in Industrial Production and Manufacturing Production.
The dollar was under pressure from lower T-note yields, which weakened the dollar’s interest rate differentials.
