The Analytical Overview of the Main Currency Pairs on 2023.07.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1226
• Prev. Close: 1.1237
• % chg. over the last day: +0.10%

The euro continues to strengthen on the back of the dollar’s weakness and the hawkish stance of the ECB representatives. Bundesbank head Joachim Nagel said that he expects the ECB to raise the rate by 0.25% at the next meeting. Moreover, analysts at G-10 banks believe that the dollar will enter a multi-year downtrend, partly on the basis that the Fed’s tightening cycle will turn into an easing cycle, and this will pull the dollar down, even if other central banks also cut rates.

Trading recommendations

• Support levels: 1.1195,1.1070,1.1001,1.0958,1.0925,1.0866
• 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 price is trading at the levels of moving averages with signs of buying pressure. The MACD indicator is in the positive zone, but the divergence is observed in several time frames. There is a high probability of a correction, but the price is likely to reach the resistance level of 1.1272. Under such 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: 1.3090
• Prev. Close: 1.27471.3072
• % chg. over the last day: -0.14%

After last week’s unexpectedly strong wages data, Wednesday’s inflation data will determine whether the Bank of England will hold another aggressive 50 basis points rate hike in early August. And the most important factor for the Bank of England will be services inflation data. Services inflation is forecast to remain unchanged, which, given the robust labor market, increases the likelihood of a 0.5% rate hike at the next meeting. And by reducing the interest rate differential between the Bank of England and other central banks, the British pound may get additional support.

Trading recommendations

• Support levels: 1.3050,1.3000,1.2925,1.2848,1.2797,1.2762,1.2646
• Resistance levels: 1.3140,1.3308

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is forming a narrow flat as a sign of additional liquidity accumulation. The MACD indicator has become negative, but a slight buying pressure remains. The most optimal level for buying is 1.3050 or 1.3000 but with confirmation. Sell trades are best considered in case of a false breakout of the 1.3140 resistance level.

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: 138.66
• Prev. Close: 138.71
• % chg. over the last day: +0.04%

Today’s US Retail Sales data will have a significant impact on USD/JPY pricing. This data will show how Americans are spending money in a period of high-interest rates. Strong data will give temporary confidence to the USD, which will cause the USD/JPY to rise. Weak data will further strengthen investor confidence that the US Fed will complete the tightening cycle before the fall.

Trading recommendations

• Support levels: 138.40,137.93,137.25,136.56
• Resistance levels: 139.36,140.18,142.08,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is in a downtrend. Now the price is forming a price corridor. The MACD indicator has become inactive. The most suitable level for buying will be 138.40 or 137.93 but with confirmation on the lower time frames in the form of buyers’ initiative. Sell trades can be considered from the resistance level of 139.36 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: 1.3211
• Prev. Close: 1.3198
• % chg. over the last day: -0.09%

The Canadian dollar is a commodity currency, so it depends on both the dollar index and oil prices. Oil prices are rising on expectations that worsening economic growth in China will trigger additional stimulus measures from the government. This week the People’s Bank of China will hold a meeting on monetary policy, and there is a high probability of interest rate reduction and increased stimulation of the economy. This is a strengthening factor for the Canadian dollar. Today the Canadian inflation data will be published, where a further decline in inflation is expected, which is a negative factor for the CAD.

Trading recommendations

• Support levels: 1.3143,1.3108
• Resistance levels: 1.3204,1.3242,1.3289,1.3303,1.3329,1.3383,1.3426

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 is inactive now, but the buyers’ pressure remains intraday. It is better to buy from the 1.3143 level but with confirmation on the lower time frames. Sell trades are best sought from the resistance level of 1.3204 or 1.3242 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.