INTRADAY TECHNICAL ANALYSIS 25 MARCH (observation as of 07:20 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.10805 and 1.11585.
- Support line of 1.09245 and 1.08465.
Commentary/ Reason:
The euro hovered at $1.10226, rising 0.24% on Friday, but headed for around 0.50% weekly losses.
The euro has been slightly softer this week, pinned by concern that conflict in Ukraine will hurt Europe's economy by raising energy and food costs stoking inflation pressures.
A jump in German bund yields helped the euro recover some of its losses after the 10-year German bund yield rose to a 3-1/4 year high of 0.555%.
The EUR/USD also garnered some support from Thursday’s data that showed the Eurozone Mar S&P Global manufacturing PMI fell -1.2 to 57.0, stronger than expectations of 56.0.
The EUR/USD pair bounced bullishly after testing 1.0965 level yesterday, to record higher lows as appears on the chart, which leads the price to turn to rise on the intraday basis, targeting heading towards 1.108 and 1.1158 areas as the next main station.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.93669 and 0.94239.
- Support line of 0.92529 and 0.91959.
Commentary/ Reason:
The dollar shed 0.34% against the Swiss franc on Friday, to trade at 0.92701, and headed for second consecutive weekly decline.
A risk-off market mood benefitted the low-yielder Swiss franc, as investors assessing the fallout from an intensifying Russia-Ukraine conflict.
To the downside, immediate support could be on March 9 low of around 0.925, and further down support may lie at the prior lows of 0.919.
On the upside, the 55 and 100-day SMAs are straddling the recent peak of 0.936 might provide a zone of resistance, as well as the prior high of 0.942.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 121.919 and 122.631.
- Support line of 119.615 and 118.903.
Commentary/ Reason:
The Japanese yen traded at 121.679 per dollar on Friday, as it slumped for its worst week in two years, pummelled by Japan's rising import costs and low interest rates.
It has lost nearly 6% through March and headed for a 2.70% decline for this week.
The divergence between U.S. and Japanese monetary policy has weighed on the yen. The latest leg of the tumble was triggered by hawkish remarks from Federal Reserve Chair Jerome Powell this week, and a subsequent rip higher in U.S. yields.
Investors were also watching to see whether the Bank of Japan would intervene to buy Japanese government bonds (JGB) as its yield target came under pressure. Japanese bond yields are being pulled higher by U.S. Treasury yields, which have risen along with expectations for a more aggressive pace of rate hikes by the US Federal Reserve.
The yield on 10-year Japanese government bonds hit 0.235% on Friday, close to its upper limit of 0.25%.
Bank of Japan Governor Haruhiko Kuroda on Friday reiterated his view a weak yen benefits the economy as a whole, brushing aside concern the currency's slide to multi-year lows could do more harm than good to the resource-poor, import-reliant country. Kuroda said the recent rise in import prices was driven mostly by global commodity inflation, rather than the weak yen.
The yen also took a hit from higher commodity prices given Japan’s position as a major energy and raw materials importer, adding pressure to the country’s expanding trade deficit.
The USD/JPY pair traded with strong positivity to surpass our waited target at 121.919 and reach 122.361, noticing that the price rebounds bearishly from there to start bearish correction, to head towards visiting 119.615 mainly. Given the RSI decline from the overbought territory and the most bearish MACD signals in a few days, the USD/JPY prices are likely to confirm further downside.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.33157 and 1.33757.
- Support line of 1.31216 and 1.30617.
Commentary/ Reason:
Sterling hovered at $1.31986 as traders weigh a cautiously dovish outlook from the Bank of England against February data that showed higher-than-expected inflation.
The latest data showed consumer prices in the UK jumped 6.2% from a year earlier in February, the highest since March 1992 and above market expectations of 5.9%. As a consequence, money markets are raising bets the Bank of England will further hike interest rates in the coming months.
Currency market activity continued to be relatively subdued, confirming the lack of clear directional trends.
The GBP/USD pair has witnessed a steep fall after struggling to breach 1.331. The cable is oscillating in a narrow range on Friday and is likely to consolidate further. The Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals for consolidation going forward. However, a breach above 60.00 will add to the upside filters.
