INTRADAY TECHNICAL ANALYSIS 5 JULY (observation as of 08:25 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.05319 and 1.05253.
- Support line of 1.04080 and 1.03697.
Commentary/ Reason:
The euro slipped 0.40% to $1.03775, not far from its recent five-year trough of $1.03498.
The euro initially tried to rally against the U.S. dollar earlier but gave back almost all of the gains in yet another sign of weakness.
Europe remains stuck in the middle, at the mercy of dollar dynamics, geopolitical concerns, fragmentation worries, the Fed-ECB divergence and a weakening global economy.
The euro got support overnight from a rise in regional yields after Bundesbank chief Joachim Nagel said the very accommodative stance of the ECB would swiftly be abandoned and a restrictive policy stance might be needed to achieve the inflation target.
The European Central Bank is expected to raise interest rates this month for the first time in a decade, and the euro could get a lift if it decides on a more aggressive half-point move.
The EUR/USD pair’s recent trade are confined within bearish pennant pattern that appears on the chart, thus, breaking 1.0408 support will activate the negative effect of this pattern and push the price towards our next waited negative target at 1.0369.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.96431 and 0.96853.
- Support line of 0.95065 and 0.94643.
Commentary/ Reason:
The dollar is advancing slightly on Tuesday’s session, staying afloat above the 0.9600 mark after Monday’s calm session witnessed buyers overcoming sellers and the USD/CHF.
The pair is now trading at 0.96185 franc.
Sellers’ failure to reclaim 0.9506 opened the gates for buyers as they stepped in and lifted the USD/CHF.
Sentiment remains mixed, courtesy of recession threats and inflation concerns. The market narrative hasn’t changed, with high inflation and global economic slowdown, keeping investors uneasy. In the meantime, US President Joe Biden could announce a rolling back of some tariffs on China, as reported by Dow Jones.
The USDCHF pair hovers around the EMA50, keeping its stability below 0.9643, while stochastic shows new negative signals now.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 137.144 and 138.417.
- Support line of 134.598 and 133.325.
Commentary/ Reason:
The dollar gained 0.14% to 135.836 yen on Tuesday, pushed back toward reaching a 24-year top of 137.01 last week.
The dollar gaining support from a strong rebound in the 10-year Treasury yield, which jumped as high as 2.9780% earlier today from the lowest since May on Friday.
Divergent central bank policies continue to limit yen’s movement, with the Fed, BoE, and ECB ending their QE programs and raising interest rates while the BoJ maintains its QE program and record low interest rates. The BoJ is able to keep interest rates pinned down because Japanese inflation is still low by global standards, though even small price rises are causing a messaging problem for the central bank.
The USD/JPY pair opened today with clear positivity to return to the bullish channel again, which leads the price to resume the main bullish trend and stop the bearish correction that dominated the recent trades, waiting to breach 137.144 to confirm extending the bullish wave towards 138.417 as a next positive target.
The EMA50 supports the expected rise, which will remain valid unless breaking 134.598 and holding below it.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.22056 and 1.22820.
- Support line of 1.19584 and 1.18820.
Commentary/ Reason:
Sterling pulled 0.3% lower on Tuesday, to last trading at $1.20593.
Despite the recent rebound, the technical outlook doesn't yet point to a build-up of bullish momentum and Brexit-related political jitters could make it difficult for the British pound to find demand.
Over the weekend, foreign ministers of Germany and Ireland said in a joint statement that the UK was breaking an international agreement. Ministers noted that there was no legal or political justification for the UK to unilaterally change the terms of the Northern Ireland Protocol and argued that the British government chose not to act in good faith.
Political jitters and the risk-averse market mood meanwhile supported the greenback.
The GBP/USD pair shows sideways trades since yesterday, with the EMA50 continues to press negatively on the price, which keeps the bearish trend scenario valid and active, which its targets begin by breaking 1.1958 to confirm rallying towards 1.1882 as a next station.
Holding below 1.2205 is important to continue the expected decline, as breaching it will lead the price to start correctional bullish wave on the intraday basis.
