The Analytical Overview of the Main Currency Pairs on 2023.08.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0874
• Prev. Close: 1.0871
• % chg. over the last day: -0.03%

US weekly initial jobless claims fell by 9 000 to 239 000, showing a stronger labor market than expected. The resilient labor market combined with hawkish FOMC reports increased the likelihood of another rate hike from the US Fed in the fall or winter. Against this backdrop, US government bond yields reached their highest in almost ten months, further boosting the dollar. Inflation data will be published today in the Eurozone, but no significant changes are expected.

Trading recommendations

• Support levels: 1.0867,1.0858,1.0835,1.0795
• Resistance levels: 1.0898,1.0952,1.0983,1.1004,1.1046,1.1102,1.1198,1.1227.

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading at the level of moving averages. The MACD indicator is in the negative zone, but the signs of divergence are getting stronger. Sell trades can be considered from the resistance level of 1.0898 but with confirmation in the form of sellers’ reactions. Buy trades can be considered from the support level of 1.0867 or 1.0835 but with confirmation in the form of a structure change on the lower timeframes.

Alternative scenario:

if the price breaks through the resistance level of 1.0952 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2723
• Prev. Close: 1.27471.2745
• % chg. over the last day: +0.17%

The British pound is more resistant to dollar growth, mainly because the Bank of England is not in the last phase of monetary policy tightening. Economists are predicting at least two more interest rate hikes from the Bank of England before the end of the year. Only weak economic data can prevent this from happening. Today, the UK will publish retail sales data, which will show how the Brits are spending money in a period of high-interest rates. A strong report will only add confidence to the British currency.

Trading recommendations

• Support levels: 1.2726,1.2665,1.2646
• Resistance levels: 1.2796,1.2880,1.2913,1.2942,1.3011,1.3072

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to a bullish one. The price is slowly rising, testing support levels. The MACD indicator is in the positive zone, but there are the first signs of buyers’ weakness. Buy trades can be considered from the support level of 1.2726 but with additional confirmation on the lower timeframes. Sell trades are best considered from the resistance level of 1.2796 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the support level of 1.2665 and fixes below it, the downtrend will most likely be renewed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 146.24
• Prev. Close: 145.82
• % chg. over the last day: -0.29%

In Japan, the nationwide core CPI declined from 3.3% to 3.1% (3.1% forecast) on an annualized basis. This confirms the Bank of Japan’s belief that the country’s inflation is not sustainable, so it is too early to take steps regarding the normalization of monetary policy. Bank of Japan Governor Kazuo Ueda emphasized the need to maintain an ultra-soft policy until cost-push inflation turns into inflation driven by robust domestic demand and higher wage growth.

Trading recommendations

• Support levels: 145.00,143.72,143.26,142.64,140.98,140.71,139.57
• Resistance levels: 145.91,146.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading below the moving average. The MACD indicator has turned negative, and there is selling pressure inside the day, indicating a correction’s beginning. The most suitable level for buying will be 145.00, but with confirmation in the form of buyers’ initiative on the lower timeframes. In the case of currency intervention, the fall may occur to 144.41. Sell trades can be considered from the resistance level of 145.91 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price fixes below the 144.41 support level, with a high probability that the downtrend will be renewed.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3532
• Prev. Close: 1.3544
• % chg. over the last day: +0.09%

Yesterday, oil prices traded without any dynamics. The growth factor for oil was crude oil inventories, which fell to an eight-month low. Oil was also supported by more favorable than expected economic data from the US labor market. A negative factor for oil is the progress made in Iran-US relations, which could lead to increased crude oil exports from Iran. At the moment, considering the monetary policies of the central banks of Canada and the US, both currencies are at parity against the other.

Trading recommendations

• Support levels: 1.3517,1.3444,1.3410,1.3342,1.3319,1.3281,1.3263
• Resistance levels: 1.3550,1.3583

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is forming a wide-volatile corridor. Buying pressure prevails throughout the day. The MACD indicator is positive, but there are the first signs of divergence. Buying is best to look for after a pullback to the support level of 1.3517. Sell trades are better to look for from the resistance level of 1.3550, but with confirmation in the form of a false breakout, as the level has already been tested. A breakout and consolidation above 1.3550 will open the price to a 1.3583 resistance level.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1.3444, the downtrend will be renewed with a high probability.