INTRADAY TECHNICAL ANALYSIS AUGUST 23 (observation as of 06:30 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.00462 and 1.00921.
- Support line of 0.98975 and 0.98515.
Commentary/ Reason:
The dollar strengthened, knocking the euro below parity at $0.99181.
The euro languished around a two-decade low as investors braced for a hard winter in Europe as it grapples with energy supply and broader economic growth concerns.
Russia reportedly will halt natural gas supplies to Europe via the Nord Stream pipe for three days at the end of the month, the latest reminder of the precarious state of the continent's energy supply. Heatwaves in the continent have already put a strain on energy supplies and worries are growing that any disruption during winter months could be devastating for business activity.
Europe's dire energy situation suggests the peak of inflation is not here yet and the risk remains that high inflation is sticky for longer without further aggressive central bank action
S&P Global will release the preliminary estimates of its August PMIs for the US and the EU, most of them expected to indicate economic contraction, with Germany seen deeper in contractionary territory.. The U.S. will publish July New Home Sales, while the EU will unveil the preliminary estimate of August Consumer Confidence.
Investors are also waiting on minutes of ECB’s last policy meeting on Thursday that are likely to sound hawkish even as the continent faces downturn in growth.
The EUR/USD pair declined strongly yesterday, to open the way to continue the decline on the intraday and short-term basis, noting that the next negative targets reach 0.9897 followed by 0.9851.
The EMA50 continues to support the suggested bearish wave, taking into consideration that breaching 1.0046 and consolidating above it will lead the price to start recovery attempts that target visiting 1.00921 areas.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.96741 and 0.97064.
- Support line of 0.95696 and 0.95372.
Commentary/ Reason:
The Swiss franc extended its weakness against the U.S. dollar on Tuesday, amid a lack of fresh catalysts.
The recent bullish move had pushed the greenback for seventh days uptrend, traded to 0.96496 franc on Tuesday.
Investors have sought shelter in dollars is the growing risk of a hawkish message from the Federal Reserve's Jackson Hole symposium, flagged by several officials last week.
Favouring the USD/CHF buyers also following bounce in the U.S. Treasury yields. The 10-year Treasury note peaked at 3.040%, hit a five-week high of 3.040% on Monday.
The USD/CHF pair rallied and supports the expectations of extending the bullish wave on the intraday and short-term basis, opening the way to head towards 0.9674 as a next main target. Bullish trend will be suggested for the upcoming period conditioned by the price stability above 0.9569.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 137.870 and 138.234.
- Support line of 136.695 and 136.332.
Commentary/ Reason:
The Japanese yen steadied at 137.352 per dollar after touching a one-month low of 137.70.
The safe haven appeal was strong for the currency, as stock markets are in sell-off mode, and with U.S. indexes down roughly 2% each of the close.
Government bond yields, on the other hand, broke higher. The yield on the 10-year Treasury note peaked at 3.040%, a five -week high.
The interest rate differential in the U.S. meanwhile remains favouring the greenback over the yen. The Fed is in the middle of a rate-hiking cycle while the BoJ maintains QE and record-low interest rates and shows no inclination toward tightening monetary policy. The Fed’s talk towards the end of the week is awaited.
The USD/JPY pair shows more bullish bias to surpass 137.870 level and attempts to hold above it, which supports the continuation of the expected bullish wave on the intraday and short-term basis, waiting to visit 138.234 as next main targets.
Holding above 136.695 is important to continue the expected rise, noting that the EMA50 continues to support the suggested bullish wave.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.18400 and 1.18763.
- Support line of 1.17226 and 1.16863.
Commentary/ Reason:
Sterling was down 0.30% at $1.17355 on Tuesday, dragged to a new 2.5-year low, at levels last seen in March 2020 at the start of the pandemic.
The pair plummeting amid risk-off flows. Demand for the dollar resumed after Friday’s corrective decline and ahead of the Jackson Hole Symposium, where central bankers from around the globe will meet to discuss economic issues.
The dollar also remains as favourite as dollar bulls tracked the rebound in the U.S. Treasury yields across the curve in the day.
The GBP/USD pair resumed its negative trading clearly to reach 1.1722 level, reinforcing the expectations of continuing the bearish trend in the upcoming period, with the next target is located at 1.1686.
The negative pressure formed by the EMA50 supports the suggested decline, noting that breaching 1.1840 might stop the current negative pressure and push the price to start temporary bullish correction, on target that reaches 1.1876.
British manufacturing surveys due later today were expected to provide further clarity on the growth trajectory for the economy, and highlight the damage being done to activity.
Investors fear inflation in Britain at a stratospheric 10.1% will lead the BoE to keep hiking and force a recession. A faster tightening cycle from Britain’s central bank adds to downside risks to the UK economy at a time when citizens are already being battered amid the worst cost-of-living crisis in a generation.
