The Analytical Overview of the Main Currency Pairs on 2023.05.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0806
• Prev. Close: 1.0811
• % chg. over the last day: +0.07%

San Francisco Federal Reserve President Mary Daly said Monday that it is too early to tell if the US central bank will raise interest rates at its June 13-14 meeting. The CME FedWatch tool shows a 75% chance that the US Fed will keep rates unchanged next month. But uncertainty remains. St. Louis Fed President James Bullard anticipates two more rate hikes this year, while his counterpart at the Minneapolis Fed, Neal Kashkari, expressed support for a pause in June.

Trading recommendations

• Support levels: 1.0782,1.0711
• Resistance levels: 1.0836,1.0875,1.0904,1.0956,1.0995,1.1056,1.1075

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price forms a flat structure. The MACD indicator has become inactive. Under such market conditions, buy trades can be considered from the support level of 1.0782, but only with a confirmation in the form of a false breakdown. Sell deals can be considered from the resistance level of 1.0836 or 1.0875 but with confirmation in the form of a sellers’ reaction.

Alternative scenario:

if the price breaks through the resistance level of 1.0904 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2436
• Prev. Close: 1.2436
• % chg. over the last day: 0.00%

As part of its quantitative easing program, the Bank of England expects to halve the size of its portfolio to about 400 billion pounds ($500 billion) over the next few years as commercial banks reduce their demand for the safest assets. The Bank of England’s latest weekly reports show reserves of 888 billion pounds, suggesting that the Bank of England plans to write off at least 400 billion pounds. With quantitative easing, the national currency tends to get cheaper.

Trading recommendations

• Support levels: 1.2421,1.2385,1.2343,1.2320
• Resistance levels: 1.2480,1.2546,1.2569,1.2612

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price forms a flat structure at the level of the moving averages. The MACD indicator has become inactive, and there is a slight sellers’ pressure inside the day. The most optimal level to buy is 1.2385, as 1.2421 has already been tested several times. It is best to look for sell trades from the resistance level of 1.2480, but also with a confirmation on the intraday time frames, since the level has already been tested.

Alternative scenario:

if the price breaks down through the 1.2546 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 137.95
• Prev. Close: 138.58
• % chg. over the last day: +0.46%

As the central bank of Japan has chosen a data collection tactic and is not going to change its policy course towards normalization in the near future, the Japanese yen is losing ground to the stronger USD. The dollar index continues to strengthen amid uncertainty over the US debt ceiling, as well as uncertainty over the US Federal Reserve’s future moves. Investors are wondering whether there will be a pause or another rate hike in June. When markets experience such a period of uncertainty, investors tend to move assets into safe haven currencies such as the US dollar and gold.

Trading recommendations

• Support levels: 137.54,136.52,135.66,135.15,134.67,133.50,133.03,132.70
• Resistance levels: 138.73,140.53

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. At the moment, there is a price corridor formed with elements of bullish pressure inside. The MACD indicator has returned to the positive zone. The support level of 137.54 can be used only with a confirmation in the form of a false breakdown. But it is better to look for buy deals from the support level of 136.54. Sell trades can be considered from the resistance level of 138.73 but with confirmation in the form of a false breakout and reverse initiative.

Alternative scenario:

if the price fixes below the 135.66 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3498
• Prev. Close: 1.3504
• % chg. over the last day: -0.04%

Oil prices rose slightly yesterday in response to the more positive tone of the talks on raising the US debt ceiling. Higher fuel demand also influenced sentiment ahead of the upcoming Memorial Day celebration on May 29, which unofficially kicks off summer road trips in the United States. The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian currency. But against the backdrop of a rising dollar index, the price is trading flat.

Trading recommendations

• Support levels: 1.3468,1.3436,1.3397,1.3267
• Resistance levels: 1.3535,1.3589,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is still bearish. At the moment, the price forms a wide-volatile corridor. The MACD indicator has become inactive. The flat structure makes it difficult to find good entry points. Under such market conditions, it is best to look for buy trades from the support level of 1.3468 but with confirmation in the form of a false breakdown and buyers’ reaction to the level. Sell positions are best sought from the resistance level of 1.3535 but with confirmation in the form of a sellers’ initiative as well.

Alternative scenario:

by JustMarkets, 2023.05.23