The Analytical Overview of the Main Currency Pairs on 2023.06.26

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0954
• Prev. Close: 1.0889
• % chg. over the last day: -0.59%

In Europe, the latest data on business activity was disappointing. The biggest drop in manufacturing activity was seen in Germany (from 43.2 to 41.0). The Eurozone’s overall figure also showed contraction: activity in the manufacturing sector declined from 44.8 to 43.6, and in the services sector from 55.1 to 52.4. This is a signal for the ECB that high-interest rates are starting to slow down business activity seriously. With some Eurozone countries, including Germany, which is already in technical default territory, the ECB may end the tightening cycle sooner than previously planned.

Trading recommendations

• Support levels: 1.0845,1.0785,1.0719,1.0688,1.0659,1.0634
• Resistance levels: 1.0932,1.0995,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bullish, but there are all preconditions for the reversal. The MACD indicator has become negative, and the trend structure on the low time frames is already bearish. Under such market conditions, buy trades are possible from the support level 1.0845 or 1.0785, but only with an additional confirmation on the lower time frames, as the levels have already been tested. Sell deals can be considered from the resistance level of 1.0932 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through the support level of 1.0845 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2736
• Prev. Close: 1.2713
• % chg. over the last day: -0.18%

UK inflation should have fallen sharply by the middle of the year, but it did not, prompting the Bank of England to raise its rate by 0.5% last week aggressively. Financial markets are now estimating another 75-100 basis point rate hike this year to bring the bank rate to 5.75-6%. That’s at least three more 0.25% rate hikes. Under normal circumstances, higher rates support the British pound. But now, the situation is a bit different because of the impending recession. Friday’s business activity data came out worse than forecasted and showed strong declines in both manufacturing and services sectors.

Trading recommendations

• Support levels: 1.2677,1.2627,1.2539,1.2486,1.2421,1.2391,1.2349
• Resistance levels: 1.2801,1.2991

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 wide-volatile corridor with slight signs of bearish pressure. The MACD indicator has become negative. There is a high probability of correction to the nearest support levels. The most optimal level to buy is 1.2677 but with confirmation. It is best to consider sell deals from the resistance level of 1.2801 but also with confirmation since the level has already been tested.

Alternative scenario:

if the price breaks through the support level 1.2627 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 143.01
• Prev. Close: 143.66
• % chg. over the last day: +0.45%

According to analysts, falling inflation will make it difficult for the Bank of Japan (BOJ) to abandon its ultra-soft monetary policy, but changes in yield curve control (YCC) are still possible. The US dollar continues to strengthen against the yen amid hawkish statements from the US Federal Reserve policymakers. Quotes are approaching price levels of 145-146. Last year, it was at these levels that the Bank of Japan intervened. And since the government does not benefit from a too-cheap yen, there may be another intervention this time to support the exchange rate.

Trading recommendations

• Support levels: 143.31,142.37,141.60,141.23,140.16,139.85,139.23,138.81
• Resistance levels: 145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price continued its uptrend. Indicator MACD is in the positive zone, the pressure of buyers prevails, but there are signs of divergence and overbought. The most suitable level to buy would be 143.31 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 145.16 but with confirmation in the form of a bearish initiative.

Alternative scenario:

if the price fixes below the 141.60 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3152
• Prev. Close: 1.3180
• % chg. over the last day: +0.21%

Oil prices rose at the opening of trading on Monday as political problems in Russia could affect oil supply. Goldman Sachs analysts say markets are assessing a moderately high probability that domestic instability in Russia will lead to supply disruptions and have a negative impact on oil supply in the future. The Canadian dollar is a commodity currency, so the growth in oil prices contributes to the strengthening of the Canadian currency.

Trading recommendations

• Support levels: 1.3154,1.3135
• Resistance levels: 1.3246,1.3317,1.3357,1.3384,1.3461,1.3503

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is bearish. The MACD indicator is in the negative zone, and sellers’ pressure is still present. It is better to buy from the support level of 1.3154 or 1.3135 but with confirmation on the lower time frames in the form of buyers’ reactions to the level. It is better to look for sell deals from the 1.3246 resistance level but with confirmation in the form of reverse initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3293, the uptrend will resume with a high probability.