The Analytical Overview of the Main Currency Pairs on 2022.07.22

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0176
• Prev. Close: 1.0228
• % chg. over the last day: +0.51%

The European Central Bank unexpectedly raised the interest rate by 0.5%, although Christine Lagarde had indicated that the first increase would be 0.25%. The ECB report indicates that the decision is based on an updated assessment of inflation risks, as rising prices are a growing concern for households and companies. The future trajectory of interest rates will depend on new inflation data. ECB policymakers also agreed to provide additional assistance to the currency bloc’s 19 heavily indebted countries, including Italy, with a new bond-buying scheme designed to limit their rising borrowing costs and thus limit financial fragmentation. Against this news, the euro strengthened significantly.

Trading recommendations

• Support levels: 1.0188,1.0154,1.0106,1.0035,1.0000
• Resistance levels: 1.0284,1.0365,1.0415,1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is forming a wide balance, and the MACD indicator has become inactive, but the buyer’s pressure remains. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.0188 or 1.0106, but only with confirmation. Sell trades can be considered from the resistance level of 1.0284, but only after additional confirmation and only with short targets.

Alternative scenario:

if the price breaks down through the 1.0000 support level and fixes below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1974
• Prev. Close: 1.1999
• % chg. over the last day: -0.21%

In the UK, investors are watching the race for Prime Minister’s seat. Former Treasury Secretary Rishi Sunak and Foreign Secretary Liz Truss made it to the last round of the contest to become party leaders. A number of reports will also be released today. Traders expect a slowdown in the UK Manufacturing PMI for June and a decline in retail sales. If the data is worse than forecast, the British pound may react with a decline.

Trading recommendations

• Support levels: 1.1955,1.1907,1.1803
• Resistance levels: 1.2065,1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hour time is bullish. The price has slightly corrected and is trading at the level of the moving averages. The MACD indicator has become inactive. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.1955 or 1.1907, but only with confirmation. Sell trades can be considered intraday from the resistance level of 1.2065, but only after additional confirmation and with short targets.

Alternative scenario:

if the price breaks down through the 1.1803 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 138.13
• Prev. Close: 137.34
• % chg. over the last day: -0.57%

Japan’s key inflation indicator has further exceeded the Bank of Japan’s target of 2%. According to data released Friday by the Ministry of Internal Affairs, core consumer prices (excluding food and fuel prices) reached an annualized rate of 2.2%. The result was in line with economists’ estimates. Despite the continued rise in prices, the Bank of Japan is unlikely to budge anytime soon, as the Bank of Japan remains unconvinced that inflation in the country is sustainable. Bank of Japan Governor Kuroda has repeatedly said that current cost inflation is unsustainable and that the central bank needs constant easing until it is demand-driven and accompanied by sustained wage growth. But wage growth has not kept pace with inflation, with May data showing that real wages are down 1.8% from a year ago.

Trading recommendations

• Support levels: 137.11,136.48,135.92,135.40,134.64,134.11
• Resistance levels: 138.25,138.56,140.29

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish. But the price has corrected to the priority change level and traded below the moving averages, indicating temporary sellers pressure. Under such market conditions, buy trades can be sought intraday from the support level of 137.11, but with confirmation. For sell deals, traders can consider the resistance level of 138.25, but only with additional confirmation and short targets.

Alternative scenario:

If the price fixes below 137.11, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2879
• Prev. Close: 1.2864
• % chg. over the last day: -0.11%

The Canadian dollar is a commodity currency and is highly dependent on instruments such as the dollar index and oil. Both the US Dollar Index and oil quotes decreased yesterday. As a result, the USD/CAD currency pair traded in a volatile corridor. Volatility in the market increased due to a sharp increase in the ECB rate, which led to a sharp rise in the euro and a decline in the dollar index. Today the retail sales report will be published in Canada. Analysts are predicting an increase in value. If the actual value is better than the forecast, the Canadian dollar may strengthen even more (USD/CAD decline).

Trading recommendations

• Support levels: 1.2853,1.2781
• Resistance levels: 1.2934,1.3006,1.3085,1.3154

In terms of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is forming a balance and trades at the levels of the moving average lines. The MACD indicator has become inactive. Under such market conditions, it is best to consider sell deals from the resistance level of 1.2934, but with confirmation. Buy trades should be viewed on the lower time frames from the support level 1.2853, but only with confirmation and short targets.

Alternative scenario:

if the price breaks out and consolidates above the 1.3085 resistance level, the uptrend will likely resume.