INTRADAY TECHNICAL ANALYSIS 15 APRIL (observation as of 8:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.09365 and 1.10005.
- Support line of 1.07295 and 1.06655.
Commentary/ Reason:
The euro slipped 0.20% to $1.08069 on Friday, heading back toward the overnight low of $1.0776, a level unseen since April 2020.
For the week, euro has dropped 0.43%.
A more hawkish comments from Federal Reserve officials on Thursday reinforced expectations for faster U.S. policy tightening. New York Fed President John Williams said that a half-point rate rise next month was "a very reasonable option," in a further sign that even more cautious policymakers are on board with faster monetary tightening.
By contrast, ECB President Christine Lagarde concluded its latest meeting with cautious steps, saying they would start raising interest rates only "some time" after it has ended its net asset purchases in Q3.
President Lagarde also added that Eurozone growth in Q1 remained weak due to pandemic restrictions, with price rises have become more widespread and that upside risks to the inflation outlook have increased.
The EUR/USD pair bounced from the 2-years low, though bearish case remains firmly in place as it trades below bearish moving averages, while technical indicators turned lower within negative levels, with room to extend their slides. The RSI indicator, in the meantime, consolidates at around 41.
The 1.0730 level is a strong long-term static support level, and remains on the losing side. The next relevant bearish target is 1.0665, around the March 2020 low.
Most financial markets will be closed on the last day of the week amid the Good Friday holiday. Nevertheless, the U.S. will release some macroeconomic figures, including March Industrial Production and Capacity Utilization and the April New York State Manufacturing Index.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.94649 and 0.95089.
- Support line of 0.93224 and 0.92783.
Commentary/ Reason:
The dollar was traded flat against the Swiss franc on Friday, trading at 0.94147, though still elevated just below the 3-week high it touched earlier today, and was headed for around 0.85% weekly gains.
Weakness in stocks on the day boosted the liquidity demand for the dollar, on top of the strength in T-note yields Thursday.
In addition, hawkish comments from New York Fed President Williams Thursday also were supportive of the dollar when he said raising rates by 50 bp is a "reasonable option" for the Fed.
The franc meanwhile remained some support for the currency on ongoing geopolitical strife, which helped prompt the flight to safety. Ukraine said it expects Russia to launch a huge new offensive soon in the eastern Donbas region, while Kremlin blamed Ukraine for derailing peace talks.
The USD/CHF was subdued in the current region. The USD/CHF first resistance would be March’s 16 cycle highs at 0.9464. A decisive break of that area would expose 0.9508.
On the flip side, the USD/CHF first support would be at 0.932, followed by the 0.927 mark.
Further guidance on the asset will be provided by the Swiss docket, which will report the yearly Real Retail Sales later this month. Earlier, the 12-month Swiss Real Retail Sales were recorded at 12.8%.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 126.525 and 126.964.
- Support line of 125.103 and 124.664.
Commentary/ Reason:
The yen’s relentless drop continued Friday, as it weakened for an 11th straight day against the dollar on bets further divergence between U.S. and Japanese interest rates are inevitable.
The Japanese currency fell as much as 0.50% to 126.486 per dollar to extend a 20-year low. It is now headed for a 1.30% weekly drops against the greenback.
Benchmark Treasury yields surged in the U.S. overnight, widening the gap with their peers in Japan. Japan’s currency has been in freefall this year as the dovish Bank of Japan keeps local yields anchored to the floor while their Treasury equivalents surge on expectations for aggressive Fed rate hikes and more hawkish comments from its officials.
The yen has also suffered from Japan’s position as a commodity importer and is the worst-performing Group-of-10 currency against the dollar with a decline of about 9% this year. While a weak yen boosts Japanese exports, it inflates import costs for energy and food products that have already seen prices jump due to the war in Ukraine.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.31521 and 1.31960.
- Support line of 1.30099 and 1.29660.
Commentary/ Reason:
The British pound was flat on Friday to trade at $1.30733, as it pulled down from its 1-week high recorded overnight. The pound still headed for 0.30% weekly gains against the dollar.
Moving in line with other European peers as investors scaled back bets of interest rate hike, the pound retreated. The ECB concluded its latest meeting with cautious steps to unwind support and President Christine Lagarde said they would start raising interest rates only "some time" after it has ended its net asset purchases.
Inflation, growth worries and uncertainty stemming from a war in Ukraine also seems to put pressure on sterling.
Data on Wednesday was no let-up for Britain after inflation hit a 30-year high of 7.0% in March from 6.2% in February, although this came a day after a lower-than-expected U.S. print had given some traders cause to hope policy would be tightened more slowly.
Meanwhile, the Fed is expected to tighten monetary policy aggressively and deliver a 50bps rate hike this month, as the inflation rate hit 8.5% in March, the highest since December of 1981.
A corrective pullback towards the EMA20 looks like an optimal buy for investors. This will drive the asset towards the round level resistance at 1.315, followed by the EMA200 at 1.319.
On the flip side, a drop below will send the pair towards the round level support at 1.3000 psychological mark, and to 1.2966 if lower.
