The Analytical Overview of the Main Currency Pairs on 2023.07.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1196
• Prev. Close: 1.1128
• % chg. over the last day: -0.61%

The dollar rose against a basket of currencies on Thursday after data showed that the number of Americans filing new claims for unemployment benefits fell last week, reinforcing expectations that the Federal Reserve may continue raising interest rates if the economy remains strong. The US Labor Department said initial claims for state unemployment benefits fell 9,000 to 228,000. Economists had forecast 242,000.

Trading recommendations

• Support levels: 1.1070,1.1001,1.0958,1.0925,1.0866
• Resistance levels: 1.1198,1.1240,1.1272,1.1334

The trend on the EUR/USD currency pair on the hourly time frame has changed to bearish. The MACD indicator became negative. There is selling pressure in the market, and there are no signals for a reversal. Under such market conditions, buy trades can be considered from the support level of 1.1071 but with confirmation and short targets. Sell deals can be considered from the resistance level of 1.1198 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.1240 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2936
• Prev. Close: 1.27471.2866
• % chg. over the last day: -0.54%

Based on the latest data, the probability that the Bank of England will bring the interest rate to 7% has dropped sharply this week. The main target for the rate to peak is now the 6% level. The Bank of England’s current interest rate is 5%, which would imply a rate hike of another full percentage point. By the end of the year, the Bank of England is unlikely to have time to raise the rate to the required level in smaller steps of 0.25%. And it is not reasonable to raise the rate by 0.5% with a slowing economy, so politicians will have a difficult choice to make.

Trading recommendations

• Support levels: 1.2848,1.2802,1.2762,1.2646
• Resistance levels: 1.3011,1.3072,1.3140,1.3308

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is already bearish. The price broke through and consolidated below the priority change level. The MACD indicator is in the negative zone, but there are signs of divergence. The most optimal level for buy deals is 1.2802 but with confirmation on the lower time frames. Sell trades are best considered after a false breakout of the 1.2964 level.

Alternative scenario:

if the price breaks through the resistance level 1.3122 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 139.55
• Prev. Close: 140.06
• % chg. over the last day: +0.36%

The nationwide core CPI rose from 3.2% to 3.3% year-on-year. Thus core inflation remains above the Bank of Japan’s 2% target for the 15th consecutive month. The Japanese government raised its overall inflation forecast to 2.6% for the current fiscal year ahead of the central bank’s policy meeting next week. The 1.7% increase in the previous forecast indicates stronger-than-expected inflationary pressures. Rumors have returned to the market that the Bank of Japan may soon abandon its controversial yield curve control (YCC) policy, which has been criticized for distorting market pricing.

Trading recommendations

• Support levels: 139.60,138.49,137.93,137.25,136.56
• Resistance levels: 140.49,142.01,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bullish. The price is moving upward along the moving averages, but the buyers’ pressure is weak, as there is a divergence on the MACD indicator. The most suitable level to buy would be 139.60, but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the resistance level of 140.49 but with confirmation in the form of a false breakout.

Alternative scenario:

if the price fixes above the 138.48 resistance level, with a high probability, the uptrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3163
• Prev. Close: 1.3172
• % chg. over the last day: +0.07%

Oil prices rose yesterday as new stimulus measures from China boosted hopes of improved fuel demand from the world’s largest importer. But traders remain cautious ahead of the Federal Reserve’s upcoming meeting next week on Wednesday, especially after yesterday’s rise in the dollar. Any hawkish signals from the central bank could cause crude oil prices to fall due to worsening demand. In turn, a fall in the price of oil will negatively affect the Canadian currency and vice versa.

Trading recommendations

• Support levels: 1.3158,1.3108
• Resistance levels: 1.3212,1.3243,1.3329,1.3383,1.3426

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is forming a wide-volatility corridor. The MACD indicator has become positive again. It is better to buy from the support level of 1.3158 but with confirmation in the form of buyers’ initiative. Sell trades are better to look for from the resistance level of 1.3212, but also better with confirmation on the lower time frames.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3243, the uptrend will resume with a high probability.