The Analytical Overview of the Main Currency Pairs on 2023.06.02

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0679
• Prev. Close: 1.0761
• % chg. over the last day: +0.76%

The latest Eurozone inflation data showed that consumer prices declined from 7.0% to 6.1% year-over-year. Meanwhile, the core CPI (which excludes food and energy prices) fell to 5.3% y/y from 5.6%. All data came out better than expected. But ECB head Christine Lagarde said yesterday that the ECB has “no clear evidence that core inflation has peaked” and the bank does not intend to stop yet. Vice-Chairman Luis de Guindos does not yet see a victory over inflation either. The ECB is expected to raise the rate two more times by 0.25% at each of its meetings before the end of the summer. This could provide momentum for the euro as the rate differential with the US Fed narrows.

Trading recommendations

• Support levels: 1.0711,1.0659,1.0634
• Resistance levels: 1.0800,1.0836,1.0875,1.0904,1.0956

The trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. The price has consolidated above the moving averages and above the priority change level. The MACD indicator has become positive, with no signs of a reversal. Under such market conditions, buy trades can be considered from the support level of 1.0711, but only with additional confirmation. Sell positions can be considered from the resistance level of 1.0800 but with confirmation in the form of the sellers’ reaction.

Alternative scenario:

if the price breaks through the support level of 1.0634 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2427
• Prev. Close: 1.2525
• % chg. over the last day: +0.79%

The UK Manufacturing Index rose to 47.1 from 46.9 last month. But if you look at the report in detail, there are more negatives than positives. Manufacturers are suffering from weak domestic market sentiment, a decline in new export orders and a drop in inventories. The rate of decline was the fastest in four months, reflecting weakening customer demand. The decline in export demand is also exacerbated by the fact that some EU customers are shifting to more local supplies to avoid trade complications after Brexit.

Trading recommendations

• Support levels: 1.2432,1.2392,1.2322
• Resistance levels: 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 has changed to bullish. The price has consolidated above the moving averages and above the priority change level. The MACD indicator became positive, and there are the first signs of divergence. The price has deviated strongly from the moving averages, so it is better to wait for a correction. The best level to buy is 1.2432 but with confirmation. It is best to look for sell deals from the resistance level of 1.2545 but with confirmation in the form of a false breakout and a change of the initiative on the lower time frames.

Alternative scenario:

if the price breaks through the support level 1.2349 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 139.32
• Prev. Close: 138.79
• % chg. over the last day: -0.38%

Stable growth in capital spending in Japan indicates an upward revision to Q1 GDP. Japanese companies increased capital spending by 11.0% in January-March compared to the same period a year earlier. The data is used to calculate revised gross domestic product (GDP) figures for the quarter due June 8 and is in line with the preliminary estimate that the economy grew by 1.6% year-over-year, twice as much as expected.

Trading recommendations

• Support levels: 138.81,138.00,137.54,136.52,135.66,135.15,134.67
• Resistance levels: 139.33,139.93,140.38,140.70,141.07

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish but close to change. Right now, the price is trading right at the level of the change of priority, and the buyers’ reaction is weak. The MACD indicator is in the negative zone, with signs of bearish pressure. Support level 138.80 can be used for buying only if the price shows a bullish reaction. Sell trades can be considered from the resistance level of 139.33 or from 139.93, but with confirmation in the form of bearish initiative.

Alternative scenario:

if the price fixes below the 138.80 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3567
• Prev. Close: 1.3447
• % chg. over the last day: -0.89%

A drop in the dollar index amid optimism over the debt ceiling bill, along with a sharp rise in oil prices, helped the Canadian currency strengthen significantly yesterday. The Canadian dollar is a commodity currency and is highly correlated with both oil prices and the dollar. Oil traders expect OPEC+ countries to announce another production cut at the June 4 meeting, which with rising demand in the summer, will push oil prices even higher.

Trading recommendations

• Support levels: 1.3436,1.3397,1.3267
• Resistance levels: 1.3503,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term has changed to bearish. The seven-day accumulation of the price led to a downward distribution. The MACD indicator is in the negative zone with signs of divergence. Under such market conditions, it is better to look for sell trades from the resistance level of 1.3504, but with confirmation in the form of sellers’ initiative on the lower timeframes. Buying is best sought from the resistance level of 1.3397, but only with confirmation in the form of a change of structure on the lower timeframes.

Alternative scenario:

by JustMarkets, 2023.06.02