INTRADAY TECHNICAL ANALYSIS AUGUST 19 (observation as of 08:00 UTC)

[EURUSD]

Important Levels to Watch for:

-        Resistance line of 1.01899 and 1.02332.

-        Support line of 1.00499 and 1.00066.

Commentary/ Reason:

  1. The euro dipped to $1.00842 on Friday, recording the weakest since July 15.

  2. The gloomy economic outlook for the Eurozone has seen the euro on course to decline 1.66% since last Friday, which would be its worst week since July 8.

  3. Since the beginning of the week, the EUR/USD began its free fall, exacerbated by the release of important U.S. economic data.

  4. Dollar strength weighed on the euro along with weak Eurozone economic data. Also, concern that the ongoing energy crisis in Europe will throw the Eurozone economy into recession is bearish for EUR/USD.

  5. The euro also retreated despite hawkish ECB comments. The euro failed to get a lift from renewed inflation fears putting pressure on regional central banks to keep tightening policy, instead worrying about risks of recession.

  6. ECB board member Isabel Schnabel fuelled inflation worries overnight by saying consumer prices could still accelerate in the short term.

  7. With EU’s core inflation three percentage points above the ECB’s 2% target, markets are wagering on another half-point rate hike in September.

  8. The EUR/USD pair enforcing the expectations of continuing the domination of the bearish trend, waiting to head towards 1.0049 followed by 1.0006 levels as next main targets, paves the way towards parity.

  9. Bearish trend scenario will remain valid and active for the upcoming period, supported by the negative pressure formed by the EMA50, while breaching 1.0189 might push the price to start recovery attempts to target testing 1.0233 areas before any new attempt to decline.

EURUSD

              

[USDCHF]

Important Levels to Watch for:

-        Resistance line of 0.95880 and 0.96160.

-        Support line of 0.94974 and 0.94694.

Commentary/ Reason:

  1. The dollar extends its uptrend to rose 0.23% at 0.95819 franc on Friday, hovering just below a fresh two week high touched earlier today, as demand for the greenback continued to surge due to positive readings of U.S economic health.

  2. Favouring the USD/CHF buyers also following bounce in the U.S. Treasury yields.

  3. The pair prints a five-days consecutive days uptrend and is now headed for 1.75% weekly gains.

  4. The USD/CHF pair open the way to achieve more gains on the intraday basis, heading to visit 0.9588 level as a next positive target. Positive trades are expected in the upcoming sessions unless breaking 0.9497 followed by 0.9469 levels and holding below them.

  5. Firmer US data, hawkish Fed speak, geopolitical and economic risks gain major attention for the greenback.

  6. Moving on, Swiss Q2 Industrial Production, prior 7.9%, will be important for USD/CHF pair traders to watch for clear directions.

USDCHF

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 136.725 and 137.978.

-        Support line of 134.219 and 132.966.

Commentary/ Reason:                                        

  1. The dollar rose 0.50% to 136.560 yen for the first time since July 28 and now is headed to end the week gaining around 1.88%.

  2. Another rise in long-term U.S. bond yields saw USD/JPY rise back.

  3. In a data released earlier today, Japan’s July headline inflation has risen to 2.6% from 2.4% in June. That was above expectations of 2.2% and higher than the Bank of Japan’s goal of 2.0%.

  4. While inflation exceeded its 2% target for four straight months, the BoJ is likely to remain an outlier in keeping monetary conditions ultra-loose with price rises still modest compared with other major economies.

  5. The interest rate differential in the U.S. 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.

  6. BoJ Governor Haruhiko Kuroda has stressed that the central bank will not see an exit from its massive stimulus programme until consumer demand picks up.

  7. The USD/JPY pair continued the bullish rally, open the way to head towards 136.725 followed by 137.978 levels as next main stations, conditioned by the price stability above 134.219.

USDJPY

 

[GBPUSD]

Important Levels to Watch for:

-        Resistance line of 1.20744 and 1.21343.

-        Support line of 1.18803 and 1.18203.

Commentary/ Reason:

  1. Sterling sank to $1.19139, its weakest since July 21.

  2. The pair is also en route to lose 1.60% for the week, its biggest weekly tumble since May 6.

  3. Investors fear inflation in Britain at a stratospheric 10.1% will lead the BoE to keep hiking and actually 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.

  4. The cost-of-living crisis also saw British consumer sentiment plunge to its lowest on record in August showed a monthly survey from data provider Gfk.

  5. The dollar also remains as favourite as dollar bulls tracked the rebound in the U.S. Treasury yields across the curve.

  6. The GBP/USD pair rallied bearishly and paves the way to achieve more expected decline in the upcoming sessions, waiting to head towards 1.1880 as a next negative target. Expect the continuation of the bearish trend on the intraday and short term basis, affected by the double top pattern that its signs appear on the chart.

GBPUSD