The Analytical Overview of the Main Currency Pairs on 2023.07.17

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1214
• Prev. Close: 1.1223
• % chg. over the last day: +0.08%

The FOMC meeting will be held on July 26, and the Fed is currently in silent mode, so the USD may face further selling pressure. Market participants seem to believe that the Fed will not raise rates after the July meeting, while the dollar is likely to be highly sensitive to weak US data. Market participants could take any signs of a slowdown in the US economy as a sign that the Fed may go for a rate cut sooner than expected, which could put additional pressure on the dollar.

Trading recommendations

• Support levels: 1.1196,1.1070,1.1001,1.0958,1.0925,1.0866
• Resistance levels: 1.1272

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages, confidently breaking through all resistance levels. Now the formation of the flat is underway. The MACD indicator is in the positive zone, but the divergence is observed in several time frames, and the price is overbought. There is a high probability of correction, but the price is likely to reach the resistance level of 1.1272. Under these market conditions, buy trades can be considered from the trend-following moving averages or after a false breakdown of the 1.1196 support level. Sell deals can be considered from the resistance level of 1.1272 but with confirmation in the form of a structure change on the lower time frames.

Alternative scenario:

if the price breaks through the support level of 1.0957 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3125
• Prev. Close: 1.27471.3091
• % chg. over the last day: -0.26%

The British Pound Sterling is trading with positive momentum against a range of currencies, helped by expectations that UK interest rates will continue to rise as part of a concerted effort to reduce high inflation. It should be noted that roughly half of GBP/USD’s gains last week were due to a weaker US Dollar. But as the interest rate differential widens in Sterling’s favor, GBP pairs are likely to rise in the near future, especially if Wednesday’s inflation data shows no signs of slowing prices.

Trading recommendations

• Support levels: 1.3073,1.3000,1.2925,1.2848,1.2797,1.2762,1.2646
• Resistance levels: 1.3139,1.3308

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is starting to form a narrow flat as a sign of additional liquidity accumulation. The MACD indicator is in the positive zone, but the divergence is getting stronger. The most optimal level for buying is 1.3073 or 1.3000 but with confirmation. Sell trades are best considered at a false breakout of the resistance level 1.3138.

Alternative scenario:

if the price breaks through the support level 1.2796 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 137.96
• Prev. Close: 138.72
• % chg. over the last day: +0.55%

The Japanese yen fell slightly against the US Dollar on Friday, but despite that, it was still the strongest currency last week. Analysts believe that US yields now have much less room to rise compared to Japanese yields, especially if the Bank of Japan revises its yield curve control policy. Indeed, on Friday, Japanese ten-year bond yields hit their highest level in nearly five months. The Bank of Japan will hold its next policy decision on July 28, two days after the US Federal Reserve’s decision. The market is increasingly betting that a change in BoJ policy towards normalization is on the horizon.

Trading recommendations

• Support levels: 137.93,137.25,136.56
• Resistance levels: 138.97,140.18,142.08,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is in a downtrend. On Friday, the price reached the support level and showed a bullish initiative. On the lower time frames, there was a change of structure. The MACD indicator became positive. The most suitable level for buying will be 137.93 but with confirmation on the lower time frames in the form of the buyers’ initiative. Sell trades can be considered from the resistance level of 138.98 or 140.18, but also with confirmation on the lower time frames.

Alternative scenario:

if the price fixes above the 142.99 resistance level, with a high probability, the uptrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3109
• Prev. Close: 1.3213
• % chg. over the last day: +0.79%

StatsCan will report June CPI and May retail sales data in the coming days. When raising rates last week, the Bank of Canada cited slow improvement in core inflation and excess demand. The market expects inflation to continue to decline and May retail sales to fall. This will be a negative factor for the Canadian dollar. It is also worth remembering that the Canadian dollar is a commodity currency and rises with oil prices. Therefore, traders should always take into account a set of fundamental factors to predict the CAD movement.

Trading recommendations

• Support levels: 1.3143,1.3108
• Resistance levels: 1.3242,1.3289,1.3303,1.3329,1.3383,1.3426

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. But on Friday, the price formed a false breakdown zone downwards and showed a strong bullish initiative. The MACD indicator became positive, and the buyers’ pressure intraday remains. There are also signs of oversold conditions. It is better to buy from the level of 1.3143 but with confirmation on the lower time frames. Sell trades are better to look for from the resistance level of 1.3243 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3289, the uptrend will resume with a high probability.