INTRADAY TECHNICAL ANALYSIS 27 APRIL (observation as of 07:40 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.07362 and 1.07766.

-        Support line of 1.06056 and 1.5652.

Commentary/ Reason:

  1. The euro was pushed to a fresh five-year low of $1.06240 on fears for Europe's energy security.

  2. Ramped-up geopolitical risks in Europe boosted safe-haven demand for the dollar after Russia said it would halt gas deliveries to Poland and Bulgaria starting Wednesday for refusal to pay for gas in rubles. Russian Foreign Minister Lavrov also warned Tuesday that there’s a “serious” risk of nuclear war over Ukraine.

  3. Central bank tightening, a slowdown in China due to lockdowns in Shanghai, the ongoing war in Ukraine and Q1 earning reports kept investors concerned.

  4. The EUR/USD sell-off is now testing confluent downtrend support at 1.06056 – while the broader outlook remains weighted to the downside, the immediate decline may be vulnerable into this threshold. A break lower from here keeps the focus on subsequent support objectives at the at 1.0565.

  5. Comments Tuesday from ECB Governing Council member Kazaks were hawkish for ECB policy. The ECB’s Martins Kazaks joined a chorus of policymakers urging a swift exit from stimulus measures, suggesting the bank should raise rates soon, and has room for up to three hikes this year. The ECB will next meet on June 9 where policymakers are expected to put a firm end date on bond buys and provide clearer guidance on interest rates.

  6. Investors also eyed the Fed meeting next week. Markets have been fretting that an aggressive pace of tightening by the Fed could derail the global economy, which has only just started to recover from the pandemic. The Fed is expected to raise rates by a half a percentage point at each of its next two meetings.

EURUSD    

          

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.96462 and 0.96730.

-        Support line of 0.95597 and 0.95330.

Commentary/ Reason:

  1. The dollar rose 0.26% against the Swiss franc on Wednesday, trading at 0.96483 against the Swiss franc to record a new high since early June 2020.

  2. The pair remains elevated amidst a risk-off market sentiment, triggering a flight to safe-haven assets.

  3. The USD/CHF also has been driven higher by a strong rally in U.S. dollar thanks to the Federal Reserve turning increasingly hawkish.

  4. Should strength persist above 0.9646, we would see scope for the upside to eventually challenge the 2020 high. It is worth noting that the 14-day RSI is above the 70 level, which signals a possible change in the direction of price movement.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 128.896 and 129.423.

-        Support line of 127.190 and 126.663.

Commentary/ Reason:                                        

  1. The broader dollar strength dented an attempted bounce for the yen, which had seen some support from safety flows and positioning for the risk of a policy shift. The yen last traded about 0.45% lower at 127.786 per dollar.

  2. The Bank of Japan meets on Wednesday and Thursday and markets see some risk of adjustment to forecasts or even policy changes to try and arrest the currency's recent weakness.

  3. Nevertheless, the BoJ-Fed policy divergence should continue to act as a tailwind, suggesting that the downtick could be seen as a buying opportunity.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.27705 and 1.28530.

-        Support line of 1.25035 and 1.24210.

Commentary/ Reason:

  1. The struggling British pound hit a fresh 21-month low on Wednesday and was last trading at $1.25464.

  2. Sterling has dropped more than 2% on the dollar so far this week as soft retail sales data prompted a re-think of Britain's rates outlook, to a possible slowdown in the expected upward movement of interest rates.

  3. Fears about the economic impact of China's COVID-19 lockdowns and as an aggressive pace of U.S. rate hikes also sent investors scrambling for safety, benefitted to the greenback. Protracted Russia-Ukraine conflict also continue to weigh on the market mood.

  4. The GBP/USD pair begins to decline again now, to keep the bearish trend scenario valid and active on the intraday and short-term basis, supported by the negative pressure formed by the EMA50, waiting to visit 1.2503 that represents our next target, while the continuation of the bearish wave depends on the price stability below 1.27705.

GBPUSD