The Analytical Overview of the Main Currency Pairs on 2023.08.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0972
• Prev. Close: 1.0980
• % chg. over the last day: +0.07

US inflation data came out better than expected. The overall annualized inflation rate rose from 3% to 3.2% (forecast 3.3%), while core inflation (excluding food and energy prices) fell from 4.8% to 4.7% (forecast 4.8%). According to the FedWatch Tool, the probability that the Fed will keep the rate on hold at the September meeting rose from 85% to 89%, while the probability of a rate hike at the November meeting remained at 28%. This suggests that investors believe that the Fed rate maximum has been reached.

Trading recommendations

• Support levels: 1.0964,1.0926,1.0866
• Resistance levels: 1.1026,1.1046,1.1102,1.1198,1.1227

The trend on the EUR/USD currency pair on the hourly time frame is bearish. Yesterday, the price made an attempt to break out and change the priority, but the price failed to consolidate above the priority change level. The MACD indicator was positive at the moment of the news, and now it has become inactive again. Under such market conditions, buy trades can be considered from the support level of 1.0964 or 1.0926, but with confirmation in the form of buyers’ reactions. Sell trades can be considered from the resistance level of 1.1026 but with confirmation in the form of sellers’ initiative.

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: 1.2715
• Prev. Close: 1.27471.2674
• % chg. over the last day: -0.32%

Today in the UK, the second quarter GDP data will be released. The economy is expected to grow by 0.2% for the quarter, and the economy is expected to remain at 0.5% on an annualized basis. Such data would indicate that the economy as a whole is barely growing but is not in contraction territory either. At the last meeting, the Bank of England raised interest rates by 25 basis points in line with market forecasts and left open the possibility of a further rate hike at the September meeting. According to the latest market estimates, the probability of a 25 basis point rate hike on September 21 is almost 70%, with the final rate expected next March at 5.75%.

Trading recommendations

• Support levels: 1.2676,1.2649
• Resistance levels: 1.2750,1.2804,1.2880,1.2913,1.2942,1.3011,1.3072

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 1.2804 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: 143.66
• Prev. Close: 144.73
• % chg. over the last day: +0.74%

The US Consumer Price Index released yesterday led to the growth of the dollar against the yen. As a result of the rally, the USDJPY pair is now close to the psychological level of 145.00. Over the past few weeks, policymakers in Japan have been saying that currency intervention remains on the table should there be excessive movements in the Japanese currency. Analysts believe the BOJ can only intervene if the yen loses about 2% or more against the US dollar within 24 hours. But as has been the case before, Japan’s central bank can spring a surprise when markets least expect it. Therefore, traders should not rule out the bank’s intervention if USDJPY exceeds 145.

Trading recommendations

• Support levels: 143.73,143.26,142.64,140.98,140.71,139.57
• Resistance levels: 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. The MACD indicator is in the positive zone, but the divergence is observed in several time frames. The most suitable level for buying will be 143.73 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the resistance level of 145.00 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price fixes below the 143.26 support level, with a high probability that the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3414
• Prev. Close: 1.3447
• % chg. over the last day: +0.24%

OPEC said in its monthly report on Thursday that it expects a healthy oil market for the rest of the year and stuck to its forecast of sustainable oil demand in 2024 as the global economic growth outlook improves slightly. With speculation of another US interest rate hike subsiding after the inflation data, oil could correct in the coming weeks. The Canadian dollar is a commodity currency and is directly correlated to oil prices. Therefore, a fall in oil will have a negative impact on the Canadian dollar.

Trading recommendations

• Support levels: 1.3392,1.3342,1.3319,1.3281,1.3263,1.3224,1.3199
• Resistance levels: 1.3453,1.3500

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of moving averages. The MACD indicator is in the positive zone. It is better to buy after a pullback to the support level of 1.3392 or, in case of a deeper correction – to 1.3341. Sell trades are better to look for from the resistance level of 1.3453, 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.