INTRADAY TECHNICAL ANALYSIS 22 JUNE (observation as of 08:25 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.05729 and 1.06173.
- Support line of 1.04293 and 1.03849.
Commentary/ Reason:
The euro fell 0.3% to $1.05021, as investors turned to the dollar as part of a move away from riskier assets which also saw a stock market rally fizzle out.
The EUR/USD pair unable to hold above the resistance level, to face negative pressure, which stops the recently suggested positive scenario and lead the price to turn to decline again, on its way to achieve negative targets that start at 1.0429 and extend to 1.0384.
Hence, bearish bias will be suggested in the upcoming sessions unless breaching 1.0572 and holding above it again.
Wednesday's main event is the start of U.S. Federal Reserve Chair Jerome Powell's two-day testimony to Congress, with investors looking for further clues about whether another 75-bps rate hike is on the cards at the Fed's July meeting.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.97530 and 0.97963.
- Support line of 0.96131 and 0.95699.
Commentary/ Reason:
The dollar added 0.23% against the Swiss franc on Wednesday, to trade at 0.96795.
The safe haven dollar gained ground as investors turned nervous again about global growth prospects.
Investors also continue to assess fresh cues from top central banks about their monetary policy plans, especially from the U.S. Fed. Fed Chair Jerome Powell will appear before Congress later, kicking off two days of testimony to the U.S. Senate Banking Committee for clues on future interest rate hikes and his latest views on the economy. A hawkish statement could see another bout of U.S. dollar strength as yields rise again.
The USD/CHF pair continues to fluctuate, waiting to break 0.9613 to get negative motive that assist to push the price to head towards 0.9570 as the next main negative target.
Bearish overview will remain valid and active unless breaching 0.9753 and holding with a daily close above it.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 137.882 and 139.666.
- Support line of 134.314 and 132.530.
Commentary/ Reason:
The yen was last drifting at 136.272 per dollar, firmer on the day, having hit 136.710 in early trade, its lowest since October 1998.
The yen hit a fresh 24-year low as elevated bond yields in the U.S. and Europe contrasted with low Japanese interest rates.
The Bank of Japan, after maintaining its ultra-low interest rates and vowed to defend its policy of yield curve control (YCC), which effectively caps the yield on the 10-year Japanese government bond at 0.25% last week, released the minutes from its April monetary policy meeting on Wednesday morning.
Most members of BoJ policy board expect short-term and long-term interest rates to remain at their present levels or lower, the minutes added. Japanese Prime Minister Fumio Kishida said the central bank should maintain its current ultra-loose monetary policy. This makes it an outlier among other major central banks.
The currency also has been weakening as higher energy prices put pressure on Japan's current account.
Fed chair Jerome Powell is due to start his testimony to Congress on Wednesday with investors looking for further clues about whether another 75-basis-point rate hike is on the cards at the Fed's July meeting.
The USD/JPY pair rallied upwards to breach 135.60 level, to now heads towards resuming the main bullish trend, opening the way to achieve new gains that start at 137.882 and extend to 139.666.
Therefore, we are waiting for more expected rise in the upcoming sessions supported by the EMA50, noting that breaking 134.314 will put the price under the correctional bearish pressure again.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.24926 and 1.26320.
- Support line of 1.20414 and 1.19020.
Commentary/ Reason:
Sterling was down 0.56% at $1.22070 as traders assessed the elevated British consumer price data released earlier today.
The GBP/USD struggles to extend the weekly rebound as bulls take a breather.
The U.K. inflation hit 9.1% year-on-year in May as soaring food and energy prices continue to deepen the country’s cost of living crisis. An elevated CPI figure will certainly add further pressure on the Bank of England to keep raising rates, as Britain, like most developed economies, grapples with sky high inflation. The 9.1% rise marked the steepest annual climb since records began in 1989.
The Bank of England last week implemented a fifth consecutive hike to interest rates, though stopped short of the aggressive hikes seen in the U.S. and Switzerland, as it looks to tame inflation without compounding the current economic slowdown.
Investors also turned to the dollar as part of a move away from riskier assets which also saw a stock market rally fizzle out.
