The Analytical Overview of the Main Currency Pairs on 2023.05.24

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0806
• Prev. Close: 1.0770
• % chg. over the last day: -0.33%

Due to output contraction, the Eurozone business activity index (PMI) declined in May. The composite PMI fell from 54.1 to 53.3, the first decline since last October. The first decline in the index in more than six months indicates a weakening of the manufacturing sector. The manufacturing business activity index indicated an even larger decline from 48.5 to 46.3. The report also showed that the divergence between services and manufacturing is growing, and services inflation is accelerating again. And this could be a problem for the European Central Bank.

Trading recommendations

• Support levels: 1.0762,1.0711
• Resistance levels: 1.0797,1.0836,1.0875,1.0904,1.0956,1.0995,1.1056,1.1075

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is forming a flat structure with elements of bearish pressure. The MACD indicator has become negative again. Under such market conditions, buy trades can be better considered from the support level of 1.0762, but only with confirmation in the form of a false breakdown and change in the structure on the lower time frames. There is a high probability of a test of the 1.0711 support level. Sell deals can be considered from the resistance level 1.0797 or 1.0835 but with confirmation in the form of sellers’ reactions.

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: 1.2429
• Prev. Close: 1.2413
• % chg. over the last day: -0.13%

Inflation data will be released today in the UK. Bank of England (BoE) Governor Andrew Bailey said late last week that energy prices were up nearly a third of overall inflation, and he expects a decline of at least two percentage points in today’s report. Consumer prices are projected to fall from 10.1 % to 8.2% annually. But don’t expect the Bank of England to pause its tightening cycle. Inflation in the UK is still nearly double that of other major economies.

Trading recommendations

• Support levels: 1.2391,1.2343,1.2320
• 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. Yesterday the price tested the support level of 1.2385 and showed bullish initiative. The MACD indicator became inactive. The most optimal level for buying is the level of 1.2391. It is best to look for sell trades from the resistance level of 1.2480 but also with confirmation on intraday time frames, as 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: 138.57
• Prev. Close: 138.56
• % chg. over the last day: 0.00%

Japan’s manufacturing PMI rose to 50.8 from 49.5, helped by an increase in new orders and production. The Index rose above 50 for the first time since last October. It should be noted that the 50 level is a kind of divider between the growth of the sector (value above 50) and its contraction (value below 50). The services business activity index rose to a new record high of 56.3 from 55.4. But the JPY had little reaction to the data. For the Japanese currency, the main event of the week is the Tokyo Consumer Price Index for the month of May. The Index is considered a leading indicator of consumer inflation in the country.

Trading recommendations

• Support levels: 138.00,137.54,136.52,135.66,135.15,134.67,133.50,133.03,132.70
• 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 become inactive. The support levels of 138.00 and 137.54 can be used only with a confirmation in the form of a false breakdown since the price has already been tested. But it is better to look for buy deals from the 136.54 support level. Sell deals can be considered from the resistance level of 138.73 but with a confirmation in the form of a false breakout and a change of the structure on the lower time frames.

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: 1.3502
• Prev. Close: 1.3501
• % chg. over the last day: 0.00%

In terms of economic events, Canada has little news this week. Therefore, it is worth keeping an eye on the dollar index and oil prices to predict the Canadian dollar exchange rate. Right now, all the factors are adding up for the growth of the “black gold” prices. First, the Canadian wildfires are reducing oil supplies in North America. Second, demand in the US is expected to increase after Memorial Day, which unofficially marks the start of summer road trips in the United States. Third, Saudi Arabia’s energy minister threatened yesterday to cut production sharply if oil prices fall below $70 a barrel. All these factors will contribute to growth in oil prices and, respectively, to the strengthening of the Canadian currency.

Trading recommendations

• Support levels: 1.3484,1.3468,1.3436,1.3397,1.3267
• Resistance levels: 1.3523,1.3589,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is still bearish. Yesterday the price tested liquidity above the resistance level of 1.3534. The MACD indicator is still inactive. Under such market conditions, it is best to look for sell deals from the resistance level of 1.3523 with the aim of testing liquidity below 1.3484. Buy trades are best sought from the 1.3468 support level but with confirmation in the form of a false breakdown and buyers’ reaction to the level.

Alternative scenario:

by JustMarkets, 2023.05.24