The Analytical Overview of the Main Currency Pairs on 2023.05.02

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1023
• Prev. Close: 1.0975
• % chg. over the last day: -0.44%

Inflation data will be released in the Eurozone today. Investors’ main focus will be on core inflation data, which excludes food and energy prices. If core inflation shows signs of slowing, it will make it even more likely that the ECB will raise interest rates by 0.25% on Thursday. But if core inflation stays the same or rises, it will increase the probability of a 0.5% rate hike. In that case, the interest rate differential between the US Fed and the ECB will narrow, which will have an impact on the euro’s strength.

Trading recommendations

• Support levels: 1.0963,1.0895,1.0830,1.0803,1.0770,1.0680
• Resistance levels: 1.1003,1.1038,1.1075,1.1185

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: 1.2552
• Prev. Close: 1.2494
• % chg. over the last day: -0.46%

The US Manufacturing PMI data bolstered expectations of a 25 basis point Fed interest rate hike on Wednesday and increased the likelihood of another hike in June. This sent the dollar index higher against major currencies. Today the manufacturing PMI data will be released in the UK. A decline in the index will be a negative factor for the British currency and vice versa.

Trading recommendations

• Support levels: 1.2468,1.2421,1.2386,1.2343,1.2320,
• Resistance levels: 1.2536,1.2569,1.2643

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. At the moment, the price is trading below the moving averages. The MACD indicator has become negative, and there is seller’s pressure. The best levels to buy would be the 1.2468 support level or, in case of a stronger decline, 1.2421. The breakdown of the 1.2421 support level will change the priority. Sell trades are best looked for on intraday time frames from the resistance level of 1.2536 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: 136.12
• Prev. Close: 137.45
• % chg. over the last day: +0.98%

Manufacturing activity in Japan has declined for the sixth month in a row in April. The manufacturing purchasing managers’ index (PMI) rose slightly to 49.5 in April from 49.2 in March. The report showed that factory production declined for the tenth consecutive month, with manufacturers citing raw material shortages as seriously affecting production. Japan’s economy is moderately recovering from the recession, but there has been an increase in bankruptcies. Prices remain relatively high due to rising raw material costs.

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. The MACD indicator is in the positive zone, and there are signs of divergence. But without confirmation in the form of a false breakout of the resistance level and structure change 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 134.52 support level, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3445
• Prev. Close: 1.3442
• % chg. over the last day: -0.02%

Activity in the manufacturing sector in Canada rose last month. The PMI was 50.2 in April, up from 48.8 in March. The Canadian dollar appreciated slightly on this data despite the decline in oil prices yesterday. Weaker production data from China (the biggest oil importer) is weighing on demand. Normally oil prices rise seasonally ahead of summer, but economic conditions outweigh demand this year. This could result in OPEC+ countries cutting production again to keep prices above $80 a barrel.

Trading recommendations

• Support levels: 1.3523,1.3468,1.3448,1.3409,1.3341,1.3267
• Resistance levels: 1.3582,1.3624,1.3647,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is correcting. The MACD indicator is in the negative zone, sellers’ pressure remains, but there are signs of divergence. It is better to look for buy deals from the support level of 1.3523 but with confirmation in the form of a false breakdown. Sell positions are better to look for from the resistance level of 1.3582 but with confirmation in the form of a false breakout and reverse initiative.

Alternative scenario:

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