The Analytical Overview of the Main Currency Pairs on 2023.05.15

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0914
• Prev. Close: 1.0851
• % chg. over the last day: -0.58%

The latest economic data showed that the annualized inflation rate in France increased from 5.7% to 5.9%. In Spain, inflation jumped from 3.3% to 4.1%. And in Germany, inflation fell from 7.4% to 7.2% y/y. This week, consumer price data will be released by Italy, after which the overall figure for the Eurozone will be announced. Core consumer prices (which exclude food and energy prices) are expected to remain at 5.6%. This figure will encourage further rate hikes by the ECB.

Trading recommendations

• Support levels: 1.0828,1.0711
• Resistance levels: 1.0904,1.0956,1.0995,1.1056,1.1075,1.1094,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages, and the MACD indicator is in the negative zone with no signs of divergence. Downward movement persists, and buyers’ reaction to support levels is weak. Under such market conditions, further price decrease is expected with the aim to test a support level of 1.0828. Buy deals are best considered from the 1.0885 support level but with confirmation in the form of a change in the structure on the lower time frames. Sell deals can be considered from the resistance level of 1.0904, but only with confirmation in the form of a seller’s initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.1000 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2508
• Prev. Close: 1.2447
• % chg. over the last day: -0.49%

UK GDP fell 0.3% last month, below market expectations. Nevertheless, overall GDP rose by 0.1% in the first quarter on a quarterly basis. Despite the Bank of England raising interest rates by 25 basis points at its meeting last week and continuing to signal that the door remains open for further hikes, the British pound has lost its resilience against the US dollar. The political controversy over raising the US government debt ceiling is forcing investors to sell riskier assets and move their holdings into the dollar as a safe haven.

Trading recommendations

• Support levels: 1.2436,1.2386,1.2343,1.2320
• Resistance levels: 1.2516,1.2569,1.2612

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to bearish. The price broke through the priority change level and consolidated lower. The MACD indicator is in the negative zone, but there are signs of divergence, which indicates the weakness of the sellers. The most optimal level to buy is the 1.2436 level, but only with confirmation on the lower time frames in the form of a change in the structure. It is best to look for sell deals from the resistance level of 1.2569 but with confirmation in the form of reverse initiative.

Alternative scenario:

if the price breaks down through the 1.2612 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 134.47
• Prev. Close: 135.74
• % chg. over the last day: +0.94%

On the weekend, Bank of Japan (BoJ) governor Kazuo Ueda said that the central bank of Japan would stick to a soft monetary policy at this stage. The Japanese yen is reacting with a decline. The interest rate differential between the US Fed (5.25%) and the BoJ (-0.1%) remains in favor of a stronger dollar against the yen. On the other hand, thanks to the BoJ’s soft monetary policy, Japan has not felt such a surge in inflation as other countries, so it sees no need to tighten. Moreover, the Bank of Japan predicts that inflation in the country will return to the target level by the end of the fiscal year.

Trading recommendations

• Support levels: 133.79,133.47,133.03,132.70,132.02,131.82,130.62
• Resistance levels: 134.97,136.46,136.85,137.26,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish, but it is close to changing. At the moment, the price is trading above the moving averages in the Fibonacci premium zone. The MACD indicator has turned positive and buying pressure persists. Under such market conditions, it is best to look for purchases from the support level of 135.15 or from 134.67, but with confirmation in the form of impulse reactions of buyers. Sell deals can be considered from the resistance level of 134.42, but also with confirmation on the lower time frames.

Alternative scenario:

if the price fixes above the 137.26 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3489
• Prev. Close: 1.3556
• % chg. over the last day: +0.49%

The US dollar rose sharply against its major currencies last week, posting its best 5-day period this year. Treasury yields rose on Friday, and risk appetite worsened. A rising dollar tends to depress the value of oil. The Canadian dollar, being a commodity currency, is suffering from falling oil prices, but the medium-term outlook for oil remains bullish as OPEC countries cut production and demand rises ahead of summer.

Trading recommendations

• Support levels: 1.3300,1.3267
• Resistance levels: 1.3406,1.3484,1.3551,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish but close to change. The price is testing the priority change level. The MACD indicator is ascending but with signs of divergence. Under such market conditions, it is best to look for buy trades from the support level of 1.3500, but with confirmation in the form of buyers’ reactions to the level. Sell deals are best sought from the resistance level of 1.3551, but with confirmation in the form of a sellers’ initiative.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3551, the uptrend will likely be renewed.