INTRADAY TECHNICAL ANALYSIS 6 APRIL (observation as of 06:30 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.10215 and 1.11122.

-        Support line of 1.08401 and 1.07494.

Commentary/ Reason:

  1. The euro was down at $1.08966 on Wednesday, its lowest level in nearly a month.

  2. The euro is being undercut by concern about the outcome of the French elections, and the Eurozone economy may slow due to increased sanctions on Russia.

  3. The new proposed EU sanctions would ban buying Russian coal and prevent Russian ships from entering EU ports, part of a ramp-up of western sanctions on Russia over its nearly six-week invasion of Ukraine.

  4. The dollar meanwhile was supported on a hawkish comment overnight from a U.S. Fed official, who said that the task of reducing inflation pressures is "paramount" and the FOMC "will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as the May meeting."

  5. A jump in T-note yields also supported gains in the dollar after the 10-year T-note yield climbed to the highest level since May 2019. Weakness in stocks Wednesday also sparked some liquidity demand for the dollar.

  6. The markets will be looking to Wednesday's release of minutes from the Federal Reserve's last policy meeting that could offer signs that the U.S. central bank could raise its benchmark overnight interest rate by half a percentage point next month.

  7. The EURUSD pair resumed its negative trading, towards the waited target at 1.0840, and to expect the continuation of the negative pressure to surpass this level and open the way to extend the bearish wave towards 1.0750.

EURUSD

 

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.93152 and 0.93393.

-        Support line of 0.92372 and 0.92131.

Commentary/ Reason:

  1. The dollar was last bought 0.92131 against the Swiss franc to notch a new 1-week high, as it gradually climbing back off the 3- week low recorded Thursday,

  2. The jump in U.S. bond yields has boosted the dollar, on hawkish remarks by the Federal Reserve Governor Lael Brainard.

  3. The U.S. dollar also continued to march higher as risk aversion remained prevalent as Western allies are expected to up the ante on their sanctions against Russia.

  4. The Swiss National Bank meanwhile last week kept interest rates unchanged at -0.75% in its March meeting, despite doubling its year-end inflation forecast to 2.1%.

  5. The USD/CHF first resistance would be 0.9315. A decisive break would expose January 31 daily high at 0.933. On the flip side, the USD/CHF first support would be the 50-DMA at 0.923. Breach of the latter would send the pair sliding towards the 200-DMA at 0.9213.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 124.605 and 125.969.

-        Support line of 121.877 and 120.513.

Commentary/ Reason:                                        

  1. The dollar rose 0.30% to trade at 123.970 yen, its highest in a week, and heading back towards March's near 7-year peak of 125.090.

  2. The greenback was trading firm against the Japanese yen, on Bank of Japan's conviction and repeated action last week to hold the yield on 10-year Japanese government bonds below 0.25%.

  3. USD/JPY also rallied as the higher T-note yields undercut the yen, boosted by hawkish comments from Federal Reserve officials on who pushed for a quick reduction in the central bank's bloated balance sheet.

  4. Rising prospects of fresh sanctions on Russia and weakness in Japanese stocks Wednesday meanwhile slightly sparked some safe-haven demand for the yen.

  5. The USD/JPY pair rallied upwards, reinforcing the expectations of continuing the main bullish trend, waiting for more positive trading to visit around 125.00 as a next target.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.31657 and 1.32047.

-        Support line of 1.30396 and 1.30007.

Commentary/ Reason:

  1. Sterling slipped to $1.30484 on Wednesday, heading back in the direction of early month's below $1.30, the lowest since November 2020.

  2. U.S. Treasury yields soared as it climbed to the highest level since May 2019, underpinning a dollar bid and consequently weighing on pair for a fourth consecutive session.

  3. Sentiment remains cautious as Russia’s invasion of Ukraine continues to hold significant sway over how traders think the Bank of England will proceed in the coming months. Rate hike odds have increased meaningfully for the BoE in recent weeks, with hikes expected at each meeting from May through November.

GBPUSD