INTRADAY TECHNICAL ANALYSIS AUGUST 18 (observation as of 07:00 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.02645 and 1.03080.
- Support line of 1.01240 and 1.00806.
Commentary/ Reason:
The euro bought $1.01608.
The euro eased against the U.S. dollar on Thursday, due to firmer demand for the greenback, after the U.S. Fed in its FOMC minutes meeting indicated the possibility of a significant interest rate adjustment to bring rising inflation under control.
Eurozone economic data Wednesday on Q2 GDP and Q2 employment meanwhile also weighed on the euro. Eurozone Q2 GDP was revised lower to +0.6% q/q and +3.9% y/y from the previously reported +0.7% q/q and +4.0% y/y, while Eurozone Q2 employment rose +0.3% q/q and +2.4% yy/y, weaker than the +0.6% q/q and +2.9% y/y pace from Q1.
The common currency is trading close to parity since early July, as there are increasing signs the Eurozone economy is heading into a recession, at a time inflation continues to break record highs, the energy crisis is far from over, and the ECB is set to continue to increase borrowing costs, as well as weighed down by Europe's struggles with the war in Ukraine.
The EUR/USD pair tested the key support 1.124, with the EMA50 met this support to add more strength to it, to keep the bearish trend scenario active, waiting to visit 1.0080 next.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.95475 and 0.96053.
- Support line of 0.93605 and 0.93027.
Commentary/ Reason:
The dollar rose 0.20% at 0.95345 franc on Thursday, gained for fourth consecutive day to hover just below the weekly high of 0.95431 recorded overnight.
The dollar is in a strong uptrend as bulls are looking to step back following the Fed minutes.
Favouring the USD/CHF buyers also following bounce in the U.S. Treasury yields.
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 136.429 and 138.022.
- Support line of 133.243 and 131.650.
Commentary/ Reason:
The dollar rose 0.26% to held at 135.386 yen on Thursday. It is still some distance from its high this year of 139.387 on July 14.
Another rise in long-term U.S. bond yields saw USD/JPY rise back. Higher T-note yields supported the dollar after the 10-year T-note yield climbed to a 3-1/2 week high.
The interest rate differential in the U.S. also continues to favour the greenback over the yen.
The USD/JPY pair supports the continuation of the expected bullish trend scenario on the intraday and short-term basis, to reach target at 136.429, waiting for more rise to head towards 138.022 as a next main station.
Bullish trend will remain suggested in the upcoming sessions supported by the EMA50, noting that holding above 133.243 is important to achieve the waited targets.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.21823 and 1.22793.
- Support line of 1.19883 and 1.18913.
Commentary/ Reason:
Sterling slid overnight after double-digit inflation focused investors' concerns on recession risk.
It was last fetching $1.20064 on Thursday, hovering just above the 3-week low on July 26.
Britain's consumer price inflation rose to 10.1% in July, its highest since February 1982, official figures showed. 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.
The dollar also remains as favourite as dollar bulls tracked the rebound in the U.S. Treasury yields across the curve on the day.
The GBP/USD pair bounced downwards clearly to test 1.1988 support line. Breaking the support will press on the price to start bearish wave that next targets visiting 1.1891, while breaching the resistance represents the key to return to the main bullish track that its targets begin at 1.2182 and extend to 1.2279.
