The Analytical Overview of the Main Currency Pairs on 2022.05.26

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0736
• Prev. Close: 1.0678
• % chg. over the last day: -0.54%

The Fed minutes confirmed that most participants are prone to raise rates by 50 basis points at their next two meetings. Concerns were also expressed that it would be difficult to reduce inflation to 2% if inflation expectations remain elevated. Much attention should be paid to today’s US GDP data. In the initial report, the economy unexpectedly contracted by 1.4%, so if today’s data is worse, it could heighten fears of stagflation.

Trading recommendations

• Support levels: 1.0643,1.0680,1.0611,1.0568,1.0509,1.0445,1.0379,1.0342
• Resistance levels: 1.0700,1.0759,1.0799,1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. But the price began to correct, and the MACD indicator became inactive. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0643, but only with confirmation. Sell trades can be considered from the resistance level of 1.0759 but only after the additional confirmation.

Alternative scenario:

if the price breaks out through the 1.0508 support level and fixes below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2524
• Prev. Close: 1.2572
• % chg. over the last day: +0.38%

The UK Consumer Confidence Index is the lowest since 1974. Rising consumer prices are increasing the risks of recession in the British economy. The Bank of England does not deny such a scenario in the next six months but does not intend to act aggressively. Many analysts believe that the Bank of England has already come to terms with the stagflation scenario and does not want to tighten its monetary policy so as not to increase the pressure on the already slowing economy.

Trading recommendations

• Support levels: 1.2525,1.2437,1.2398,1.2283,1.2199
• Resistance levels: 1.2602,1.2695,1.2792,1.2981

On the hourly time frame, the GBP/USD currency pair trend is bullish. The MACD indicator is positive, but the divergence is getting stronger, which indicates the weakness of the buyers. Under such market conditions, buy deals may be considered from the support level of 1.2525, but only with additional confirmation. Sell deals should be looked for from the resistance level of 1.2602, but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks down through the 1.2398 support level and fixes below, the mid-term downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 126.78
• Prev. Close: 127.26
• % chg. over the last day: +0.39%

The Producer Price Index, which shows the inflation rate between factories and plants, rose from 1.3% to 1.7% year on year. This is a sign that inflationary pressures are rising throughout the economy. Consumer prices have already reached the 2% target. But the Bank of Japan still adheres to soft monetary policy, arguing that inflation is not yet sustainable. Soft monetary policy weakens the national currency.

Trading recommendations

• Support levels: 126.25,125.47
• Resistance levels: 127.53,128.29,128.73,129.07,130.12,130.99

The medium-term trend on the USD/JPY currency is bearish. The MACD indicator is in the positive zone, but the buyer’s pressure is weak. Buy trades can be considered from the support level of 126.25, but with confirmation. For sell deals, resistance level of 127.53 may be considered, but only with additional confirmation.

Alternative scenario:

If the price fixes above 129.07, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2817
• Prev. Close: 1.2817
• % chg. over the last day: 0.00%

The fundamental picture of the USD/CAD currency pair remains the same. The Bank of Canada is on the way to aggressively raising rates, as well as the US Fed. Oil prices have been trading without significant dynamics for the last three trading sessions. Currently, the USD/CAD pair is trading in a wide sideways channel at the moment.

Trading recommendations

• Support levels: 1.2817,1.2783,1.2774,1.2692,1.2644,1.2607,1.2521
• Resistance levels: 1.2893,1.2953,1.3000,1.3052

The USD/CAD currency pair is bearish in terms of technical analysis. But the price is forming a wide-volatile sideways, which will eventually lead to an impulsive movement. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2817, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2893, but also better with confirmation and short targets.

Alternative scenario:

if the price breaks through and consolidates above 1.2953, the uptrend will likely resume.