INTRADAY TECHNICAL ANALYSIS 15 JUNE (observation as of 08:15 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.05169 and 1.05628.
- Support line of 1.03682 and 1.03222.
Commentary/ Reason:
The euro jumped 0.65% to $1.04831, after the ECB's governing council said it would hold an emergency meeting on Wednesday to discuss the recent sell-off in government bond markets, briefly distracting traders ahead of a much-watched Fed meeting.
The announcement of the meeting comes after the spread between the yields of Germany and more indebted southern nations, particularly Italy, soared to its highest in over two years.
The single currency also found some support from a strength in stocks, which sparked demand for riskier assets.
The Federal Reserve policy meeting is due to conclude later Wednesday, and markets are pricing in an outsized 75-bps interest rate hike as policymakers try to rein in rampant inflation.
The EUR/USD pair’s recent trades are confined within the lines. The price had to break 1.03682 to get negative motive that assist to rally towards our next negative target at 1.0322.
Bearish overview will remain valid and active for the upcoming period supported by the EMA50 that continues to press negatively on the price, noting that breaching 1.0516 will push the price to test 1.0562 before any new attempt to decline.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 1.00234 and 1.00724.
- Support line of 0.98647 and 0.98156.
Commentary/ Reason:
The dollar slipped slightly lower at 0.99937, retreated after recorded parity with the Swiss franc on Tuesday.
The dollar remains elevated, buoyed by a rise in Treasury yields as expectations of a more hawkish Fed are pushing up the dollar against the safe haven currency.
The U.S. dollar had already been gaining ground in the past few months thanks to the Fed raising rates ahead of most other major central banks and has been given another leg up in recent weeks as investors seek safe havens fearing the economic impact of rapidly tightening financial conditions.
The U.S. FOMC decision is due Wednesday, while the Swiss National Bank will meet on Thursday, with a 25-bps increase is on the cards.
The Swiss economy is expected to expand by 2.6% in 2022, the government said on Wednesday, becoming the latest region to downgrade its growth estimates, citing Russia’s invasion of Ukraine, global inflation, and uncertainties in China.
The Swiss National Bank will take into account the economic situation when it decides its monetary policy on Thursday.
The USD/CHF pair rallied upwards and attempt to surpass 1.0000 barrier, to support the expectations of continuing the main bullish trend, which its next target located at 1.0023.
Stochastic current negativity might cause some temporary sideways fluctuation before resuming the expected rise, noting that breaking 0.9864 will press on the price to decline and test 0.9815 areas before any new attempt to rise.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 135.391 and 136.003.
- Support line of 133.411 and 132.799.
Commentary/ Reason:
The Japanese yen traded at 134.720 per dollar, recovered during the Asia day.
The Japanese currency has lost more than 14% against the greenback so far this year, briefly slipping as low as 135.573 yen per dollar earlier today, its lowest since October 1998, which was a time of global financial strain after a Russian debt default.
Volatility in government bond markets weighed on the yen, on higher U.S. rates versus rock bottom Japanese yields. The latest surge came after the Bank of Japan ramped up its bond buying to keep yields near zero, even as much of the rest of the world tightens policy. With the Bank of Japan expanding bond purchases on Tuesday and unlikely to budge from its ultra-low rates policy at its Friday meeting, a respite for the yen looks unlikely.
The USD/JPY pair showing temporary decline to test the bullish channel’s support line, waiting to resume the positive trades to achieve additional gains that reach 135.391.
Bullish trend scenario remain active for the upcoming period, noting that breaking 133.411 will press on the price to achieve some bearish correction before turning back to rise again.
The FOMC and BoJ decision later in the week is awaited. Analysts expect Wednesday may see the Fed go 75-bps and flag more, while the BoJ on Friday will only flag more bond buying. If this happen, the Japanese yen is not going to stay at these levels for long. It's going to get worse.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.22166 and 1.23285.
- Support line of 1.18767 and 1.17717.
Commentary/ Reason:
Sterling was at $1.20604 after slumping to a 15-month low versus the dollar at $1.19337 the previous day, not helped by the possibility of a new referendum on Scottish independence.
Disappointing figures of unemployment rate also made it difficult for the British pound to find demand in the early European session.
The Bank of England’s Monetary Policy Committee will announce its latest interest rate decision on Thursday. The BoE will most likely raise borrowing costs for a 5th time by 25-bps to 1.25%, the highest since early 2009 as inflation runs at 40-year highs and is expected to hit double digits in Q3 although there's a risk the economy will plunge into recession.
Elsewhere, hot inflation in the US raised prospects the Fed will take an aggressive interest rate hike trajectory.
The U.S. dollar had already been gaining ground in the past few months thanks to the Fed raising rates ahead of most other major central banks and has been given another leg up in recent weeks as investors seek safe havens fearing the economic impact of rapidly tightening financial conditions.
The GBP/USD pair suffered additional losses yesterday. The EMA50 continues to press negatively on the price, to continue suggesting the bearish trend for the upcoming period unless the price rallied to breach 1.2216 followed by 1.2328 levels.
