The Analytical Overview of the Main Currency Pairs on 2022.05.25

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0687
• Prev. Close: 1.0735
• % chg. over the last day: +0.45%

The business activity index in the manufacturing sector and the service sector showed a decline in the Eurozone. The slowdown in activity is attributed to high inflation, rising energy prices, and problems in the supply chain, which has not yet recovered from the Covid restrictions. Some ECB officials have begun saying it was appropriate to raise interest rates by 0.5% (0.25% was previously planned) as early as July. Usually, the ECB is known for its conservatism in aggressive actions, and such statements give confidence to the euro as investors always price in the most aggressive scenario.

Trading recommendations

• Support levels: 1.0680,1.0611,1.0568,1.0509,1.0445,1.0379,1.0342
• Resistance levels: 1.0766,1.0799,1.0869

From a technical point of view, the EUR/USD currency pair trend on the hourly time frame is bullish. The MACD indicator became positive, but the divergence is increasing. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0680, but only with confirmation. Sell trades can be considered from the resistance level of 1.0766, but only after the additional confirmation.

Alternative scenario:

if the price breaks out through the 1.0508 support level and fixes below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2578
• Prev. Close: 1.2534
• % chg. over the last day: -0.35%

The British pound declined sharply yesterday amid PMI data. The manufacturing business activity index fell from 55.8 to 54.6, while the service sector index fell from 58.9 to 51.8. These are clear signs of a slowing economy. The UK is moving towards stagflation (decrease of economic indicators against the background of growing prices), and the Bank of England representatives do not talk about further monetary policy tightening yet, but only allow for another interest rate increase.

Trading recommendations

• Support levels: 1.2485,1.2437,1.2398,1.2283,1.2199
• Resistance levels: 1.2559,1.2602,1.2695,1.2792,1.2981

Alternative scenario:

The GBP/USD currency pair trend is bullish on the hourly time frame. The MACD indicator has become positive, but the divergence is increasing, which indicates the weakness of the buyers. Under such market conditions, buy deals may be considered from the support level of 1.2437, but only with additional confirmation. Sell deals should be looked for from the resistance level of 1.2559, but with confirmation in the form of sellers’ initiative.

Technical indicators of the currency pair:

Trading recommendations

The GBP/USD currency pair trend is bullish on the hourly time frame. The MACD indicator has become positive, but the divergence is increasing, which indicates the weakness of the buyers. Under such market conditions, buy deals may be considered from the support level of 1.2437, but only with additional confirmation. Sell deals should be looked for from the resistance level of 1.2559, but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks down through the 1.2398 support level and fixes below, the mid-term downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 127.88
• Prev. Close: 126.85
• % chg. over the last day: -0.81%

The Bank of Japan Governor continues to insist on monetary policy easing, even though Japan’s core inflation rate has reached the 2% target. The Japanese yen has been strengthening recently as a safe-haven currency and also on the back of a declining dollar index. However, the fundamental picture is now in favor of USD/JPY quotes increasing, as the monetary policies of the US and Japanese central banks are diametrically opposite.

Trading recommendations

• Support levels: 126.25,125.47
• Resistance levels: 127.19,127.53,128.29,128.73,129.07,130.12,130.99

The medium-term trend on the USD/JPY currency is bearish. The MACD indicator is in the negative zone, but sellers’ pressure is getting weaker, and divergence is increasing. Buy trades can be considered from the support level of 126.25, but with confirmation. For sell deals, resistance level of 127.53 may be considered, but only with additional confirmation.

Alternative scenario:

If the price fixes above 129.07, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2766
• Prev. Close: 1.2820
• % chg. over the last day: +0.42%

The fundamental picture of the USD/CAD currency pair remains the same. The Bank of Canada is on the path of an aggressive rate hike, as well as the US Fed. The decline in oil prices over the past two days has weakened the Canadian currency a little, as it is a commodity currency. At the moment the USD/CAD currency pair is trading in a wide price corridor.

Trading recommendations

• Support levels: 1.2812,1.2783,1.2774,1.2692,1.2644,1.2607,1.2521
• Resistance levels: 1.2893,1.2953,1.3000,1.3052

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator has become positive, and the buyer’s pressure is slowly increasing. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2812, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2893, but also better with confirmation and short targets.

Alternative scenario:

if the price breaks through and consolidates above 1.2953, the uptrend will likely resume.