The Analytical Overview of the Main Currency Pairs on 2022.07.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0417
• Prev. Close: 1.0264
• % chg. over the last day: -1.49%

On Tuesday, the euro fell to its lowest level in 20 years. It was largely due to falling investor sentiment, with increased fears of a recession in the Eurozone, rising gas prices, no signs of the conflict in Ukraine easing, and the US Federal Reserve and ECB interest rate differential. All of these factors have dealt a strong blow to the euro, which has lost more than 9% of its value against the dollar since the beginning of the year.

Trading recommendations

• Support levels: 1.0223,1.0179
• Resistance levels: 1.0284,1.0365,1.0415,1.0504,1.0564,1.0611

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. Yesterday, the price showed a sharp bearish impulse. When the price is trading below the moving averages, the MACD indicator has become negative, showing oversold signs. Under such market conditions, sell deals can be considered from the resistance level of 1.0284, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0223, but only with confirmation and short targets.

Alternative scenario:

if the price breaks out through the 1.0504 resistance level and fixes above, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2101
• Prev. Close: 1.1954
• % chg. over the last day: -1.23%

Yesterday, the Bank of England released its Financial Stability Report. The report indicates that the global outlook has deteriorated markedly. It’s putting pressure on household and corporate finances. Commodity markets remain significant risks, and the invasion of Ukraine is a key factor in further forecasts as it could lead to even more turmoil in global energy and food markets. The Bank of England, along with other central banks, is raising interest rates in an attempt to lower inflation. Nevertheless, Bank of England governor Andrew Bailey admitted that this has made the economic situation more difficult for households and businesses. In addition to the economic crisis, a political crisis is brewing in Britain. Finance Minister Rishi Sunak resigned just minutes after the health minister resigned, saying that he had lost confidence in Johnson’s ability to govern in the national interest.

Trading recommendations

• Support levels: 1.1938
• Resistance levels: 1.1989,1.2021,1.2065,1.2095,1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The situation is very similar to the euro. Yesterday the price showed a sharp bearish impulse. When the price is trading below the moving averages, the MACD indicator has become negative, showing oversold signs. Under such market conditions, sell deals can be considered from the resistance level of 1.1989 or 1.2021, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1938, but only with confirmation and short targets.

Alternative scenario:

if the price breaks out through the 1.2137 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 135.56
• Prev. Close: 135.88
• % chg. over the last day: +0.24%

Despite the dollar’s impressive rally yesterday, the Japanese yen traded much more quietly than the other currencies, indicating that USD/JPY prices may have reached a ceiling and could reverse soon. However, this is not helped by the policy of Japan’s Central Bank, which continues to take a soft approach, while the US Federal Reserve is aggressively raising interest rates.

Trading recommendations

• Support levels: 135.16,134.11,133.35,131.67,131.00,130.12,129.48,128.76
• Resistance levels: 136.48

The medium-term trend on the USD/JPY currency pair is bullish. Buyer’s pressure in recent days is increasing again. The MACD indicator has become positive, and the price forms a wide balance. Under such market conditions, buy trades can be considered from the support level of 135.16, but with confirmation. A resistance level of 136.48 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario:

If the price fixes below 133.35, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2861
• Prev. Close: 1.3028
• % chg. over the last day: +1.30%

The American dollar showed a spectacular rally yesterday, while oil prices collapsed. As a result, the USD/CAD quotes soared. The Canadian dollar is a commodity currency, so it highly depends on instruments such as the dollar index and oil. However, it should be noted that the Bank of Canada is also on the way to tightening the interest rates and practically does not lag behind the US Federal Reserve. It means that the Canadian dollar has a reason to strengthen.

Trading recommendations

• Support levels: 1.2998,1.2959,1.2934,1.2894
• Resistance levels: 1.3052,1.3077

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. Yesterday the price showed a sharp bullish impulse, and the MACD indicator is in the overbought zone. Under such market conditions, waiting for a small pullback is better, as the price has strongly deviated from the average lines. It is best to look for buy trades on the lower time frames from the support level of 1.2998 or 1.2959, but better with additional confirmation. For sell deals, it is best to consider the resistance level of 1.3052, but it is also better with confirmation and short targets.

Alternative scenario:

if the price breaks through and consolidates below the 1.2894 support level, the downtrend will likely resume.