INTRADAY TECHNICAL ANALYSIS SEPTEMBER 6 (observation as of 07:15 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 euro was up 0.36% to $0.99637 on Tuesday after it hit a two-decade low of $0.987 on Monday as the prospects for a winter without Russian gas sunk in.
Russian energy supplier Gazprom announced it would not resume its supply of natural gas to Europe through the key Nord Stream 1 pipeline because of a malfunctioning turbine, leading some governments there to announce emergency measures to ease the pain of soaring energy prices.
The dollar took a breather on Tuesday after a sweeping rally, easing slightly from milestone highs on the euro, though still supported as recession stalks Europe, and U.S. interest rates are poised for sharp rises.
Euro area PMI survey data showed that Germany's services sector contracted for a second month running in August. France's service sector eked out modest growth, though purchasing managers there said the outlook was bleak.
The EUR/USD pair shows some bullish bias to test 1.00 level, but stochastic loses its positive momentum to show clear overbought signals, while the EMA50 continues to press negatively on the price.
These factors encourage us to continue suggesting the bearish trend for the upcoming period, which targets 0.9897 followed by 0.9851 levels as next main stations.
The ECB meets later this week and is expected to deliver its second big rate hike in an attempt to combat inflation, which is running at more than four times its 2% target.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.98906 and 0.99658.
- Support line of 0.97402 and 0.96650.
Commentary/ Reason:
The dollar eased against the Swiss franc on Tuesday, shed 0.10% to 0.97847 franc, pulling back from the 6-week high recorded Thursday.
The dollar remains on safe haven flows demand due to global economic weakness and as the country’s resilient economy paves the way for the U.S. Federal Reserve to remain aggressive in its rate hikes. Fed Powell’s speech on Thursday will dictate the likely monetary policy action for the September meeting.
The pair also expected to remain on the sidelines as investors are awaiting the release of the US ISM Services PMI data.
The USD/CHF pair trades negatively for now to break the bullish channel’s support line and settles below it, which puts the price under expected negative pressure on the intraday basis, targeting visiting 0.9740 mainly.
Bearish bias will be suggested for today, noting that breaching 0.9890 will stop the expected decline and lead the price to recover again.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 141.027 and 142.237.
- Support line of 138.607 and 137.397.
Commentary/ Reason:
The dollar jumped against the Japanese yen, as it renews a 24-year top at 141.351.
The yen tumbled hard as U.S. rate hikes gather pace and widen the gap on anchored Japanese interest rates.
The Japanese yen was pushed lower by a widening policy gap as the BoJ committed to maintain ultra-low interest rates at a time the Fed has been talking up further monetary tightening to stamp out inflation.
BoJ Governor Haruhiko Kuroda recently reiterated the need to keep policy ultra-loose, arguing that external factors driving domestic inflation higher will start easing next year. This has left the yen among the world's only zero-yielding currencies, fuelling bets of further depreciation and a possible government intervention in the foreign exchange markets.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.16278 and 1.16740.
- Support line of 1.14782 and 1.14320.
Commentary/ Reason:
Sterling was last up 0.60% to $1.15888 on Tuesday, after sliding to a 2-1/2-year low of $1.1423 on Monday.
Liz Truss was named as Britain’s new Prime Minister, after winning a leadership vote on Monday, taking power at a time when the country faces a cost-of-living crisis, industrial unrest, and a recession. In her victory speech Truss said she planned to cut taxes and deal with energy bills. Her promises of tax cuts add uncertainty to government finances.
The GBP/USD pair opened today’s trading with rise to breach 1.1627 level and attempts to hold above it, to head towards achieving intraday gains that target 1.1674 level before may turning back to decline again.
Bullish bias will be suggested for today, noting that the expected rise is temporary, waiting to resume the main bearish trend within the bearish channel that appears on the chart.
The negative shift witnessed in risk sentiment amid the deepening energy crisis in the euro area meanwhile provided a boost to the greenback and weighed on GBP/USD. Brexit issues also remains an unresolved issue that is likely to make it difficult for the pound to stage a decisive rebound.
