The Analytical Overview of the Main Currency Pairs on 2023.08.09

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1001
• Prev. Close: 1.0955
• % chg. over the last day: -0.42%

The German inflation rate decreased from 6.4% to 6.2% in annualized terms. Consumer prices rose by 0.3% over the past month. The data was in line with the consensus forecast. The report indicates that rising food prices continue to have an upward impact on inflation. In addition, the increase in energy prices was slightly larger than in the previous two months. As a result, despite the slight decline, inflation is still high, which increases the likelihood that the ECB will raise the rate at least one more time before the end of the year.

Trading recommendations

• Support levels: 1.0926,1.0866
• Resistance levels: 1.0977,1.1046,1.1102,1.1198,1.1227

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is again trading below the moving averages, and the buyers’ pressure is weak. The MACD indicator has become negative, and the probability of the continuation of the downward movement is increasing. Under such market conditions, buy trades can be considered from the support level of 1.0926, but with confirmation in the form of buyers’ reaction. Sell trades can be considered from the resistance level of 1.0974 but with confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks through the resistance level of 1.1046 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2781
• Prev. Close: 1.27471.2746
• % chg. over the last day: -0.27%

Unfavorable Chinese economic data and weak UK retail sales data put pressure on GBP/USD. China’s trade balance data showed that imports and exports fell below forecasts and the previous month’s figures, opening the door for a slowdown in the global economy. In addition, UK data showed that BRC retail sales only grew by 1.5% vs. 4.9% compared to the previous month.

Trading recommendations

• Support levels: 1.2676,1.2649
• Resistance levels: 1.2754,1.2804,1.2880,1.2913,1.2942,1.3011,1.3072

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is forming a wide-volatile corridor. The MACD indicator has become inactive. The most optimal level for buying is 1.2676 but with confirmation on the lower time frames. Sell trades are best considered from the resistance level of 1.2754 but with confirmation in the form of a false breakout and sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2804 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 142.45
• Prev. Close: 143.36
• % chg. over the last day: +0.63%

Japanese workers’ wage growth unexpectedly slowed down in June, indicating that the labor market may be losing some strength and clouding the outlook for the Bank of Japan’s sustainable inflation target. Nominal worker income rose by 2.3% year-on-year, down from a revised 2.9% in the previous month. The result fell short of the consensus forecast of 3% growth. The data confirms the BoJ’s recent assessment that price growth above 2% on a sustained basis is still not possible, and therefore ultra-soft policy settings should be maintained for the time being.

Trading recommendations

• Support levels: 142.46,140.98,140.71,139.57
• Resistance levels: 143.46,143.32,145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The bullish trend continues, and the buyers’ pressure is growing again. But the price is trading in front of the resistance level, which must be broken for further upward movement. The MACD indicator has returned to the positive zone. The most suitable level for buying will be 142.64 but with confirmation in the form of buyers’ initiative on the lower time frames. Buy trades can also be considered after the breakout of the 143.46 resistance level. Sell trades can be considered from the resistance level at 143.46 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price fixes below the 140.70 support level, with a high probability that the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3368
• Prev. Close: 1.3417
• % chg. over the last day: -0.37%

Canada’s trade balance recorded a negative balance for the second consecutive month due to a drop in exports. The country’s trade deficit totaled CAD3.7 billion ($2.7 billion) in June – the biggest since October 2020 – compared to an upwardly revised deficit of CAD2.7 billion in May. A strike at British Columbia’s seaport terminals and severe flooding in Nova Scotia will impact trade activity in July, analysts said. A slowdown in trade could have a negative impact on GDP growth in the third quarter.

Trading recommendations

• Support levels: 1.3392,1.3342,1.3319,1.3281,1.3263,1.3224,1.3199,1.3150,1.3131
• Resistance levels: 1.3500

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading above the moving averages but reached the daily resistance level of 1.3500. The MACD indicator is above zero, but the buying pressure has disappeared. Buying is best sought after a pullback to the support level of 1.3392 or in case of a deeper correction to 1.3341. Sell trades are best sought from the resistance level of 1.3500, subject to a false breakout, as the level has already been tested.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1.3319, the downtrend will resume with a high probability.