The Analytical Overview of the Main Currency Pairs on 2022.05.09

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0540
• Prev. Close: 1.0545
• % chg. over the last day: +0.05%

According to European Central Bank President Christine Lagarde, stagflation is not the most likely economic outcome for the Eurozone, although the war in Ukraine is slowing growth and accelerating inflation. ECB officials are still determined to continue normalizing monetary policy, and many remain open to the possibility of a first interest rate hike in July. Lagarde also added that net asset purchases should end early in the third quarter based on available data. Asked about interest rates, the ECB President said officials would keep “all options open” and move forward gradually.

Trading recommendations

• Support levels: 1.0453
• Resistance levels: 1.0566,1.0633,1.0723,1.0766,1.0799,1.0869,1.0955

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is still bearish. The price has dropped below the moving averages, and the MACD indicator has become negative. Under such market conditions, traders can look for sell deals from the resistance level of 1.0566, but only after the additional confirmation. Buy trades can be considered on intraday timeframes from the support level of 1.0453, but only with short targets and confirmation.

Alternative scenario:

if the price breaks out through the 1.0770 resistance level and fixes above, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2356
• Prev. Close: 1.2326
• % chg. over the last day: -0.24%

Bank of England officials expect a serious economic slowdown in the second half of the year while inflation rises. At the same time, they plan to raise the interest rate to 2.5%, with inflation at 7.0%. To curb inflation, the interest rate must be either at the same level as inflation or 1%. As a result, the UK economy will likely face a slowdown, and inflation has not even reached its peak. Investors understand this, so the British pound is under selling pressure, especially when the dollar index rises.

Trading recommendations

• Support levels: 1.2293,1.2127
• Resistance levels: 1.2450,1.2519,1.2602,1.2695,1.2792,1.2981,1.3010,1.3114

On the hourly time frame, the GBP/USD currency pair trend is still bearish. The MACD indicator became negative, selling pressure remained high, but divergence appeared. Under such market conditions, sell trades should be looked for from the resistance level of 1.2450 intraday. For buy deals, traders may consider the level of 1.2127, but only with short targets and after confirmation in the form of buyers’ initiative.

Alternative scenario:

if the price breaks down through the 1.2695 resistance level and fixes above, the mid-term uptrend will likely be resumed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 130.18
• Prev. Close: 130.53
• % chg. over the last day: +0.27%

At the last monetary policy meeting, the Bank of Japan announced it would continue its easing policy to manage the economy. At the same time, Kuroda said he would leave interest rates unchanged and continue the asset purchase program. The fundamental picture of the USD/JPY currency pair remains unchanged. The monetary policy of the central banks of the United States and Japan is still at different poles, contributing to the growth of USD/JPY quotes in the medium term. Therefore, any pullback should be used as a buying opportunity. But inflation in Japan is rising slowly and is approaching the 2% target. As soon as the country’s inflation rate reaches 2%, the Bank of Japan will abandon its ultra-soft monetary policy.

Trading recommendations

• Support levels: 130.57,129.42,128.55,127.29,126.91,126.00,125.57
• Resistance levels: 131.24

The medium-term trend on the USD/JPY currency pair is still bullish. The MACD indicator has become positive, and the buying pressure has increased. Under such market conditions, it is best to look for buy deals, expecting the continuation of the uptrend. First of all, it is worth considering the support level of 130.57. A resistance level of 131.24 may be considered for sell deals, but only with additional confirmation and short targets.

Alternative scenario:

If the price fixes below 128.55, the uptrend will likely be broken.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2827
• Prev. Close: 1.2907
• % chg. over the last day: +0.62%

Canada’s unemployment rate fell to 5.2% in April, the lowest level since 1976. Economists and policymakers expect job creation to slow as employment is already well above the pre-pandemic level. The imbalance between supply and demand for jobs is the main reason why the Bank of Canada is tightening its monetary policy. Analysts believe that the Bank of Canada will continue to raise interest rates in the coming months aggressively.

Trading recommendations

• Support levels: 1.2908,1.2774,1.2692,1.2644,1.2607,1.2521
• Resistance levels: 1.3033

In terms of technical analysis, the USD/CAD currency pair is bullish. The price forms a wide price corridor, but buyer pressure prevails. The MACD indicator is in the positive zone, but the divergence of higher timeframes is increasing. Trade is worth it only with short targets because, fundamentally, both the dollar index and the Canadian dollar are inclined to grow. Under such market conditions, it is better to look for buy trades on the lower timeframes from the support level of 1.2908, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3033, but it is also better with confirmation and short targets.

Alternative scenario:

if the price breaks through and consolidates below 1.2693, the downtrend will likely be resumed.