The Analytical Overview of the Main Currency Pairs on 2023.05.01

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1019
• Prev. Close: 1.1017
• % chg. over the last day: -0.02%

Many important statistics were released on Friday concerning European countries. In Germany, the inflation rate dropped from 7.4% to 7.2%, and last quarter’s GDP declined by 0.1%. In France, consumer prices rose from 5.7% to 5.9% year-over-year in April. France’s GDP added 0.2% for the quarter. The total GDP for the Eurozone showed a decline of 0.1%. The slowdown in Europe’s economy will likely force ECB policymakers to lower the pace of rate hikes to 0.25%. But a lot will also depend on the Eurozone core inflation data released tomorrow. Today is a bank holiday in the Eurozone.

Trading recommendations

• Support levels: 1.0993,1.0963,1.0895,1.0830,1.0803,1.0770,1.0680
• Resistance levels: 1.1038,1.1075,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is forming a wide-volatile flat. The MACD indicator has become inactive. Under such market conditions, it is best to consider buying deals from the support level of 1.0993 but with confirmation. Also, traders may buy after an impulse breakout of the 1.1038 resistance level. Sell positions can be considered from the resistance level of 1.1038 or 1.1075, but only with a confirmation in the form of a false breakout and short targets.

Alternative scenario:

if the price breaks down through the support level of 1.0963 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2482
• Prev. Close: 1.2566
• % chg. over the last day: +0.67%

The British pound ended last week on a positive note. There will be a few UK macro statistics this week. And the British pound may come under pressure as the US Federal Reserve and the ECB plan to raise interest rates. The rate differential will rise temporarily, which will play in favor of a stronger dollar and euro against the British currency.

Trading recommendations

• Support levels: 1.2524,1.2514,1.2421,1.2386,1.2343,1.2320,
• Resistance levels: 1.2569,1.2643

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. On Friday, the price rose steadily and reached the resistance level of the higher time frame. The MACD indicator is in the positive zone with no signs of divergence. Buying is best considered after a slight correction, as the price has deviated from the moving averages. The best support levels would be 1.2524 or 1.2514. Breaking through the resistance of 1.2569 will open the way to 1.2643. It is best to look for sell trades on intraday time frames from the resistance level of 1.2565 or 1.2643 but with confirmation in the form of a change in the structure on the lower time frames.

Alternative scenario:

if the price breaks down through the 1.2421 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 133.91
• Prev. Close: 136.30
• % chg. over the last day: +1.78%

After the Bank of Japan kept all monetary policy settings on Friday, including leaving the yield curve control levels, it caused a big sell-off in the Japanese yen. According to Ueda, the Bank of Japan will spend one to one and a half years analyzing various unconventional monetary measures. Investors hoped that the new governor Kazuo Ueda would quickly lead the policy toward normalization and create a phased exit plan from the soft monetary policy, as well as a strategy for abandoning the control of the yield curve. But that has not happened. The Japanese yen now has no fundamental factors for strengthening, and the interest rate differential with other central banks will continue to have a negative impact on the Japanese currency.

Trading recommendations

• Support levels: 135.11,134.52,133.11,132.70,132.02,131.82,130.62
• Resistance levels: 136.71,137.39,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is growing, breaking through all the resistance levels on its way. The MACD indicator is in the positive zone, with signs of divergence. But without confirmation in the form of a false breakout of the resistance level and change of the structure on the lower time frames, it is too early to talk about selling. Under such market conditions, it is best to look for buy deals after a pullback to the support level of 135.11 or 134.52, but with a confirmation in the form of buyers’ reactions.

Alternative scenario:

if the price fixes below the 133.11 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3590
• Prev. Close: 1.3544
• % chg. over the last day: -0.34%

On Friday, the World Bank released its latest “Commodity Market Outlook” report for 2023. Energy prices are projected to average $84 per barrel this year. At the same time, over the weekend, it became known that OPEC+ countries are planning to further reduce production levels. At the current level of oil prices at $76-77 per barrel, the potential of $7-8 growth opens good prospects of strengthening the Canadian currency. The Canadian dollar is a commodity currency, so a rise in oil prices is rightly positive for the CAD value.

Trading recommendations

• Support levels: 1.3523,1.3468,1.3448,1.3409,1.3341,1.3267
• Resistance levels: 1.3624,1.3647,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. But on Friday, the price formed a false breakout zone and changed the structure on the lower time frames. The MACD indicator is in the negative zone, and sellers’ pressure is still there. Buy trades are better to look for from the support level of 1.3523 but with confirmation in the form of a false breakdown. Selling is better to look for it from the resistance level of 1.3624 or 1.3647 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks out and consolidates below the support level of 1.3468, the downtrend will likely resume.