The Analytical Overview of the Main Currency Pairs on 2023.05.30

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0714
• Prev. Close: 1.0708
• % chg. over the last day: -0.06%

After the US banking sector crash in March, there were expectations that credit conditions would tighten and the economy would deteriorate. In that context, there were also expectations that the Federal Reserve would not raise rates in June and that rates had peaked, and the Сentral Bank would have to cut interest rates by the end of 2023. In May, however, there was an adjustment in expectations. Current prices suggest about a 60% probability that rates will be raised in June and a 50% probability that they will be raised in July. Expectations of a rate cut in 2023 have gradually disappeared. Along with the reduced risk of US default, this situation will generally lead to an even greater decline in the euro in the short term.

Trading recommendations

• Support levels: 1.0701,1.0674
• Resistance levels: 1.0759,1.0800,1.0836,1.0875,1.0904,1.0956,1.0995

The trend on the EUR/USD currency pair on the hourly timeframe is bearish. The price is trading at the support level, forming a narrowing liquidity. Such a formation usually leads to an impulse movement. The MACD indicator is in the negative zone, but the momentum indicates the weakness of the sellers. The divergence is getting stronger. Under such market conditions, buy trades should be considered from the support level of 1.0711 or 1.0674, but only with confirmation in the form of reverse initiative. Sell deals can be considered from the resistance level of 1.0759 but with confirmation in the form of sellers’ reactions.

Alternative scenario:

if the price breaks through the resistance level of 1.0800 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2332
• Prev. Close: 1.2352
• % chg. over the last day: +0.16%

The UK government plans to introduce a price cap on staple foods. Supermarkets are expected to be allowed to choose which products they will price cap. The British Retail Consortium (BRC) stated that these measures will not help deal with the rising cost of living and will only hinder efforts to reduce inflation. BRC, a trade association that advocates for more than 200 retailers, said the government should focus more on cutting red tape so that resources can be devoted to keeping prices as low as possible rather than reestablishing price controls.

Trading recommendations

• Support levels: 1.2322
• Resistance levels: 1.2386,1.2415,1.2468,1.2546,1.2569,1.2612

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is forming a wide-volatile corridor. The MACD indicator has become inactive, but the sellers’ pressure has disappeared. The most optimal level to buy is 1.2322, but with confirmation because the level has already been tested. It is better to look for sell deals from the resistance level of 1.2386 but with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the 1.2468 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 140.55
• Prev. Close: 140.43
• % chg. over the last day: -0.09%

The Japanese yen maintains a weak bias against the US dollar, as expectations of another interest rate hike by the US Federal Reserve are growing in addition to the confirmed US debt deal. As a result, the dollar index now has additional fundamental factors for strengthening. In the case of the Japanese yen, all factors point to a further depreciation of the national currency.

Trading recommendations

• Support levels: 139.83,138.86,138.00,137.54,136.52,135.66,135.15,134.67
• Resistance levels: 140.70,141.07

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is forming a flat corridor on the levels of moving averages. The MACD indicator is positive but has signs of overbuying and divergence on several timeframes. The support level of 139.83 can be used to join the bullish trend, but the targets should be close as the upside potential is limited. Sell trades can be considered from the resistance level of 140.70 or 141.07 but with confirmation in the form of a bearish initiative.

Alternative scenario:

if the price fixes below the 138.00 support level, with a high probability the downtrend will be renewed.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3606
• Prev. Close: 1.3589
• % chg. over the last day: -0.13%

Canada’s five largest banks – RBC, Scotiabank, CIBC, BMO, and TD Bank – simultaneously increased their loan loss reserves last week as they released their second-quarter earnings report. All but CIBC missed earnings expectations for the period. The last time Canadian banks significantly increased their loan-loss reserves was at the start of the COVID-19 pandemic when they feared consumers would be out of work and without steady income for an indefinite period. Analysts say banks in Canada are building up their reserves in case of a recession.

Trading recommendations

• Support levels: 1.3582,1.3523,1.3484,1.3468,1.3436,1.3397,1.3267
• Resistance levels: 1.3611,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is bullish. The price is trading at the level of the moving averages and has formed a false break-down zone. The MACD indicator is in the negative zone with no signs of activity of the parties. Under such market conditions, it is better to look for buy trades from the support level of 1.3582, but with confirmation in the form of buyers’ initiative on the lower timeframes. Sell positions are best sought from the resistance level of 1.3611 or 1.3647, but only with a confirmation in the form of a false breakout because the levels have already been tested.

Alternative scenario:

by JustMarkets, 2023.05.30