The Analytical Overview of the Main Currency Pairs on 2023.06.07

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0711
• Prev. Close: 1.0693
• % chg. over the last day: -0.18%

The European currency has a good opportunity to get stronger against the USD. The US Federal Reserve is 80% sure not to raise rates this month and more than 50% sure not to do so in July. At the same time, the ECB is planning at least two more rate hikes of 0.25% in June and July. The interest rate differential between the ECB and the US Fed will narrow by 0.25%-0.5%. In the medium term, this situation will fundamentally contribute to the growth of the euro.

Trading recommendations

• Support levels: 1.0698,1.0673,1.0659,1.0634
• Resistance levels: 1.0800,1.0836,1.0875,1.0904,1.0956

The trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. The price is still correcting. The MACD indicator is in the negative zone, but there is a divergence. Under such market conditions, buy trades can be considered from the support level of 1.0659, but only with additional confirmation in the form of buyers’ initiative. Sell positions can be considered from the resistance level of 1.0714 or 1.0778 but with confirmation in the form of a false breakdown and a change of the structure on the lower time frames.

Alternative scenario:

if the price breaks through the support level of 1.0634 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2425
• Prev. Close: 1.2422
• % chg. over the last day: -0.02%

The UK retail sales rose by 3.9% in May, down from the 5% growth seen in April. Retailers are hopeful that the rate of inflation in the economy will continue to decline, boosting much-needed consumer confidence. The problem for the retail sector remains uncontrolled food inflation, which shows little sign of abating. The grocery sector is currently the fastest-growing part of the consumer purse, so consumers are forced to spend more of their money in one area that is becoming disproportionately more expensive.

Trading recommendations

• Support levels: 1.2391,1.2349
• Resistance levels: 1.2487,1.2546,1.2569,1.2612

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price forms a flat corridor with elements of bullish pressure. The MACD indicator is in the negative zone, but the momentum is bullish. The best level to buy is 1.2391 but with confirmation. It is best to look for sell deals from the resistance level of 1.2487 but with confirmation of the change of the initiative on the lower time frames.

Alternative scenario:

if the price breaks through the support level 1.2349 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 139.56
• Prev. Close: 139.63
• % chg. over the last day: +0.05%

The weakness of the Japanese currency has prompted some market observers to predict new large-scale interventions by the country’s central bank as it continues its ultra-soft policy. Last year, Japan’s finance ministry intervened in the market to support the yen on three separate days (September 22, October 21 and October 24) with $68 billion when the currency was above 150 against the US dollar. The situation could repeat as the yen once again approaches these price levels. This time, government officials may intervene if the yen reaches the 145 level against the US dollar.

Trading recommendations

• Support levels: 139.25,138.81,138.00,137.54,136.52,135.66,135.15,134.67
• Resistance levels: 140.13,140.45,141.07

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish. The price has corrected to the buy zone according to Fibonacci. The MACD indicator is in the negative zone but without any signs of bearish pressure. To buy, it is best to wait for a bullish reaction to the support level of 139.25 or 138.81, which is the priority change level. Sell trades can be considered from the resistance level of 140.13 or 140.45 but with confirmation in the form of a bearish initiative.

Alternative scenario:

if the price fixes below the 138.80 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3441
• Prev. Close: 1.3400
• % chg. over the last day: -0.30%

Economic activity in Canada has fallen to a three-month low. The seasonally adjusted PMI fell to 53.5 in May from 56.8 in April, recording its lowest level since February. The Bank of Canada will hold its monetary policy meeting today. Interest rates are expected to remain unchanged, but there may be hawkish surprises. Yesterday Australia’s Central Bank surprised markets with a rate hike, and today the Bank of Canada may support the initiative. Even if the BoC does not raise the rate, the bank’s rhetoric could shift to another hike at its next meeting. In either case, it will be a strengthening factor for the Canadian dollar.

Trading recommendations

• Support levels: 1.3385,1.3267
• Resistance levels: 1.3504,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is bearish. A flat accumulation with expansion elements continues to form now, which complicates the search for good entry points. The MACD indicator has become inactive but indicates a divergence. There is a high probability of a corrective upward movement. It is better to buy from the resistance level of 1.3385, but only with confirmation in the form of a change in the structure on the lower time frames. It is better to look for sell deals after a true breakdown of the level 1.3385 support level.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3647, the uptrend will resume with a high probability.