The Analytical Overview of the Main Currency Pairs on 2022.05.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0539
• Prev. Close: 1.0558
• % chg. over the last day: +0.18%

Federal Reserve official Bostic said yesterday that he sees 2 to 3 rate hikes of 50 basis points in the next meetings of the Committee. Meanwhile, analysts have already estimated the probability of a 75 basis point interest rate hike at the upcoming Fed meeting on June 14-15 at 79% (yesterday it was 75%). Such sentiments are actively pushing the dollar index up. Today the European Research Institute ZEW will publish an economic sentiment index in Germany and the Eurozone. Analysts expect a further decline in business activity in the region.

Trading recommendations

• Support levels: 1.0535,1.0453
• Resistance levels: 1.0588,1.0646,1.0723,1.0766,1.0799,1.0869,1.0955

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is still bearish. The price forms a wide corridor, the MACD indicator has become positive, and the buyers’ pressure increases. Under such market conditions, traders can look for sell deals from the resistance level of 1.0646, but only after the additional confirmation. Buy trades can be considered on intraday timeframes from the support level of 1.0535, but only with short targets and confirmation.

Alternative scenario:

if the price breaks out through the 1.0723 resistance level and fixes above, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2345
• Prev. Close: 1.2329
• % chg. over the last day: -0.13%

The Bank of England should follow the Fed’s example and aggressively raise interest rates. Otherwise, the UK will face stagflation (slowing economic growth and declining GDP on the back of rising consumer prices). Analysts believe that if the Bank of England does not act decisively now, the UK will face a significant economic decline in the second half of the year. At the same time, economic surveys and studies already show that ordinary consumers have begun to save significantly due to a sharp jump in prices for almost all types of goods and services.

Trading recommendations

• Support levels: 1.2336,1.2127
• 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 price forms a wide corridor, the MACD indicator has become positive, and the buyer’s pressure increases. 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 1.2336, 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: 130.50
• Prev. Close: 130.32
• % chg. over the last day: -0.14%

In Japan, there are signs of price pressures on households. On a seasonally adjusted monthly basis, spending increased by 4.1% in March. It’s the first increase in three months. At the same time, rising living costs are putting the brakes on business activity. These are signs of rising inflation. The Bank of Japan, through its ultra-soft monetary policy, has planned to raise the inflation rate to the 2% target level, and it is likely to do so soon. However, as long as there is no talk of stopping the stimulative monetary policy, the Japanese yen will continue to weaken.

Trading recommendations

• Support levels: 129.42,128.55,127.29,126.91,126.00,125.57
• Resistance levels: 130.58,130.99

The medium-term trend on the USD/JPY currency pair is still bullish. The price forms a wide corridor, the MACD indicator has become negative, and sellers’ pressure increases. 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 129.42. A resistance level of 130.99 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: 1.2901
• Prev. Close: 1.3013
• % chg. over the last day: +0.87%

The Canadian dollar is a commodity currency and is highly dependent not only on the monetary policy of the Bank of Canada but also on the dynamics of the dollar index and oil prices. The OPEC+ Alliance of Oil Exporters agreed at its monthly meeting to increase nominal production by 432,000 barrels per day, but this is well below the projected summer oil demand. This situation led to a sharp drop in oil prices yesterday, negatively impacting the Canadian dollar.

Trading recommendations

• Support levels: 1.2838,1.2908,1.2774,1.2692,1.2644,1.2607,1.2521
• Resistance levels: 1.3019

The USD/CAD currency pair is bullish in terms of technical analysis. The price has reached the daily resistance level. 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 1.2838, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3019, 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.