The Analytical Overview of the Main Currency Pairs on 2023.05.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1004
• Prev. Close: 1.0960
• % chg. over the last day: -0.40%

Last week the Eurozone Central Bank raised the deposit rate by a quarter point to 3.25%, and ECB President Christine Lagarde signaled that more hikes are likely. After that, four more ECB officials, the heads of the central banks of Germany, the Netherlands, France, and Latvia, confirmed the comment that rates should continue to be raised as core inflation in the Eurozone remains high. Economists believe the ECB will raise the rate two more times before hitting the pause button in the fall. Reducing the interest rate differential between the ECB and the US Federal Reserve will help the euro strengthen against the dollar in the medium term.

Trading recommendations

• Support levels: 1.0942,1.0895,1.0830,
• Resistance levels: 1.0996,1.1056,1.1075,1.1094,1.1185

The trend on the EUR/USD currency pair on the hourly time frame has changed to bearish. The price is trading below the moving averages. The MACD indicator is in the negative zone without any signs of divergence. Under such market conditions, the further price decline is expected to test liquidity below 1.0942. Buy trades are best considered from the support level of 1.0942 but with confirmation in the form of a false breakdown and a change in the structure on the lower time frames. Sell deals can be considered from the resistance level of 1.0996, but only with confirmation in the form of a seller’s initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.1056 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2615
• Prev. Close: 1.2620
• % chg. over the last day: +0.04%

According to a report released by Halifax, UK house prices fell for the first time this year, highlighting the headwinds the market is facing from rising mortgage rates. This data contrasts with Nationwide Building Society data, which indicated last week that April prices rose for the first time in eight months. Mortgage lenders have begun raising home loan prices again in anticipation that the Bank of England is not yet finished raising interest rates in the fight against double-digit inflation. The Bank of England’s monetary policy meeting is due tomorrow, where it is expected to raise rates by a quarter point to 4.5%.

Trading recommendations

• Support levels: 1.2597,1.2539,1.2508,1.2421,1.2386,1.2343,1.2320,
• Resistance levels: 1.2643,1.2667

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. Unlike the euro, the pound is trading above the moving averages. A price corridor continues to form ahead of the US inflation data. The MACD indicator has become inactive. The best level to buy is 1.2598, or, in case of a stronger decline, 1.2539 support level. It is better to look for sell deals on intraday time frames from the resistance level of 1.2643 or 1.2667 but with a confirmation in the form of a false breakout and change of the structure on the lower time frames.

Alternative scenario:

if the price breaks down through the 1.2508 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 135.01
• Prev. Close: 135.22
• % chg. over the last day: +0.16%

The Head of the Bank of Japan is talking about the normalization of the monetary policy. The BoJ governor said yesterday that if the price target is stable and sustainable, the BoJ will stop controlling the ҮCC yield curve and then reduce its balance sheet. In other words, if inflation in the country shows an increase, it will lead to a revision of the soft monetary policy. That would signal growth for the Japanese yen. However, that is just a rumor, as Japan’s inflation rate has fallen over the last two months and is now closer to the 2% target.

Trading recommendations

• Support levels: 134.29,133.49,133.03,132.70,132.02,131.82,130.62
• Resistance levels: 136.41,136.85,137.26,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. At the moment, the price is forming a narrow price corridor with borders 134.63-135.30, and the price is approaching the upper boundary. The MACD indicator has become inactive. It is necessary to wait for either a true or a false breakout/breakdown of one of the flat boundaries to find good entry points. Under such market conditions, it is better to buy from the support level of 134.29 or, in case of a deeper decline, from the level of 133.48, but with a confirmation in the form of a reverse initiative. Sell trades can be considered in case of an impulse false breakout of the level of 135.30.

Alternative scenario:

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

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3362
• Prev. Close: 1.3382
• % chg. over the last day: +0.14%

The US consumer inflation data for April will be released today. This data will give an indication of whether the Federal Reserve can suspend its series of interest rate hikes at next month’s meeting. The Canadian dollar is a commodity currency and is directly dependent on the dollar index and oil prices. Analysts say a rise in inflation rates will trigger a rise in the dollar index, which will lead to a drop in oil prices and the Canadian dollar. Conversely, a decline in consumer inflation will increase the likelihood that the US Federal Reserve will pause in June, which could give a boost to both oil prices and the Canadian dollar.

Trading recommendations

• Support levels: 1.3300,1.3267
• Resistance levels: 1.3398,1.3484,1.3551,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading at the level of moving averages, forming a narrow flat. MACD indicator has become inactive. This picture is likely to continue until the publication of CPI news. It is better to look for buy deals from the support level of 1.3300 but with confirmation in the form of reverse initiative. Sell positions are best looked for from the resistance level of 1.3398 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3589, the uptrend will likely be renewed.