INTRADAY TECHNICAL ANALYSIS 16 DECEMBER (observation as of 05:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.13222 and 1.13497.
- Support line of 1.12332 and 1.12057.
Commentary/ Reason:
The euro was last at $1.12862, little changed from opening today.
The euro recovered from a 2-1/2-week low overnight and moved moderately higher. Short covering ahead of Thursday’s ECB meeting lend support for the EUR/USD.
Traders are pricing in the outcome from the FOMC meeting on Wednesday and attention now turns to policy announcements later Thursday from the ECB, which are also facing heated inflation.
The bank is trying to balance the need to support economies threatened by the coronavirus with the need to withdraw easy money to cool inflation. The ECB is expected to confirm that the bank’s pandemic bond-buying programme will end next March.
The EUR/USD pair showed no reaction to US mixed figures, trading in the 1.1280 price zone, with the near-term risk skewed to the downside. Technical indicators also lack directional strength. The Momentum indicator has advanced above its midline, but the RSI indicator remains directionless at around 45.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.92637 and 0.92885.
- Support line of 0.91833 and 0.91585.
Commentary/ Reason:
The greenback rose 0.10% higher against the Swiss franc on Thursday, last traded at 0.92504 franc.
Higher T-note yields supported moderate gains in the dollar, along with weakness in stocks, which boosted liquidity demand for the dollar.
The Swiss franc meanwhile holds on to its safe-haven appeal in cautious trading as traders digested news of the Omicron variant of COVID-19. Holding meeting later in the week is the Swiss central bank.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.423 and 114.682.
- Support line of 113.588 and 113.330.
Commentary/ Reason:
The yen softened slightly to 114.080 per dollar, continuing a weakening trend. The safe-haven currency had firmed sharply in late November, when the Omicron variant first emerged.
The prospect of rising short term rates meanwhile to support the U.S. dollar. Central bank divergence is pressuring the yen as the FOMC on Wednesday raised its forecast for interest rate hikes in 2022 and 2023 while the BOJ on Friday is expected to maintain its extremely easy monetary policy.
THE USD/JPY also rose on strength in T-note yields.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.32673 and 1.32937.
- Support line of 1.31820 and 1.31557.
Commentary/ Reason:
Sterling eased 0.10% to $1.32464 on Thursday after climbing 0.20% overnight.
The pound now rested ahead of a meeting in which the BoE is trying to both hose down inflation and address concerns about an economy already worried about the looming fast-spreading Omicron variant of COVID-19.
Investors sharply increased their bets that the BoE is about to raise rates after data on Wednesday showed UK inflation surged to 5.1% in November, its highest in more than 10 years, the same day the country recorded its highest daily coronavirus cases since the start of the pandemic.
