INTRADAY TECHNICAL ANALYSIS 17 JANUARY (observation as of 07:20 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.14477 and 1.14660.
- Support line of 1.13743 and 1.13560.
Commentary/ Reason:
The euro was flat against the dollar on mid-Monday, traded at $1.14143 after slipped off the two-month high Friday.
The dollar jumps on Friday along with U.S. yields and underscore support for the greenback from the hawkish rates outlook, though the momentum for dollar’s gains has started to wane on Monday.
The EUR/USD was under pressure from dollar strength, along with concerns that rising COVID-19 infections in Europe will lead to pandemic restrictions that undercut economic growth.
The EUR/USD seesaws around intraday high near 1.1420 amid a lackluster session during Monday European session. U.S. bond, equities markets will be off due to Martin Luther King’s Birthday. Risk catalyst will be important for fresh impulse.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.91678 and 0.91993.
- Support line of 0.91048 and 0.90733.
Commentary/ Reason:
The dollar rose 0.10% to 0.91467 franc.
The dollar gained ground on Monday, rallied moderately on support from higher T-note yields and as investors braced for January's U.S. Federal Reserve meeting.
There are no policy-relevant economic data releases this week or any scheduled speeches from Fed officials. The market will be spared ahead of their Jan 25-26 policy meeting.
The USD/CHF has rebounded from the previous support level, as buyers have returned. Intraday bias in USD/CHF remains neutral for consolidation above 0.9104 first. On the upside, above 0.9167 will target 0.9199 resistance instead.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 114.993 and 115.724
- Support line of 113.531 and 112.800.
Commentary/ Reason:
The dollar was 0.30% higher at 114.474 yen, still about 0.8% above a Friday low.
The yen remained pressured as monetary policy between Japan and other countries continued to diverge.
A Bank of Japan policy meeting will conclude on Tuesday. The BoJ policy meeting will bear watching given talk it will revise up its outlook for growth and inflation, while also debating how soon they can start telegraphing an eventual interest rate hike.
While a move is unlikely this year, financial markets may be underestimating its readiness to gradually phase out its once-radical stimulus programme.
The USD/JPY pair has pulled back, where a bullish rebound appears to be taking place. A clear upside keeps buyers hopeful to aim for the 115.00 threshold.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.37710 and 1.38220.
- Support line of 1.36690 and 1.36180.
Commentary/ Reason:
Sterling on Monday stood at $1.36724, flat on the day as a month-long rally has petered out.
British inflation data will be released on Wednesday, and analysts say it could resume gains if inflation data makes the case for higher interest rates. The pound of late has been supported by expectations that the Bank of England will be raising interest rates as early as next month to tame inflation.
Investors continue to monitor signs of a slowing economic recovery, mounting inflationary pressure, record rises in COVID-19 cases and post-Brexit tensions over the Northern Ireland protocol.
Price action may now test the 1.361 support line as buyers appear to have lost steam. Momentum indicators are bullish.