The Analytical Overview of the Main Currency Pairs on 2022.07.25

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0226
• Prev. Close: 1.0215
• % chg. over the last day: -0.11%

The European Central Bank joined many other central banks in raising interest rates last week as its focus was on fighting inflation rather than a potential economic slowdown. On Friday, ECB chief Christine Lagarde said that the ECB would raise rates as much as needed to bring inflation back to target levels. By narrowing the interest rate differential, the euro has temporarily strengthened. But it should be noted that the US Federal Reserve will raise interest rates by 0.75-1% this week, which will widen the rates spread, causing the EUR/USD quotes to fall below parity again.

Trading recommendations

• Support levels: 1.0181,1.0106,1.0035,1.0000
• Resistance levels: 1.0220,1.0284,1.0365,1.0415,1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hour time frame is bullish. The price is forming a wide balance, and the MACD indicator has become inactive, but the buyers’ pressure remains. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.0181 or 1.0106, but only with confirmation. Sell trades can be considered from the resistance level of 1.0220 or 1.0284, but only after additional confirmation and with short targets.

Alternative scenario:

if the price breaks down through the 1.0000 support level and fixes below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1989
• Prev. Close: 1.2006
• % chg. over the last day: -0.15%

Over the past month, the UK Manufacturing PMI has fallen from 52.8 to 52.2, while the service sector PMI has fallen from 54.3 to 53.3. This is weak data for the economy. The closer the index is to level 50, the closer the recession is. Statistically, if the PMI falls below 50, amid falling GDP, officials declare a recession. Volatile energy prices and a tight labor market have already caused Bank of England policymakers to oscillate between aggressively raising interest rates and the need to protect the economy from rising prices. With its open economy and huge current account deficit, the UK remains very vulnerable.

Trading recommendations

• Support levels: 1.1964,1.1907,1.1803
• Resistance levels: 1.2085,1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading at the level of the moving averages. The MACD indicator has become inactive. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.1964 or 1.1907, but only with confirmation. Sell trades can be considered intraday from the resistance level of 1.2085, but only after additional confirmation and with short targets.

Alternative scenario:

if the price breaks down through the 1.1803 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 137.34
• Prev. Close: 136.06
• % chg. over the last day: -0.94%

From the fundamental point of view, nothing has changed on the USD/JPY currency pair, as the Bank of Japan is still keeping its soft monetary policy. At the same time, the US Federal Reserve will raise the rate by another 0.75-1% this week and increase the difference between the US and Japanese rates even more. Even so, Japan’s yen has temporarily strengthened on the back of the dollar, which in turn declined at the end of last week due to the strengthening euro as the ECB raised the interest rate unexpectedly by 0.5%.

Trading recommendations

• Support levels: 135.99,135.40,134.64,134.11
• Resistance levels: 136.60,137.26,137.81,138.25,138.56,140.29

From the technical point of view, the medium-term trend on the USD/JPY currency pair has changed to bearish. The price has consolidated below the moving averages and broke through the priority change level. But it should be understood that this fall is not accompanied by any fundamental factors, so it is still necessary to be cautious when selling. Under such market conditions, buy trades can be searched for intraday from the support level of 135.99, but with additional confirmation. For sell deals, traders can consider the resistance level of 136.60 or 137.26, but only with additional confirmation and short targets.

Alternative scenario:

If the price fixes above 138.25, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2865
• Prev. Close: 1.2914
• % chg. over the last day: +0.38%

Canadian retail sales data for May increased by 1.6% on Friday, beating expectations of 1.2%. Retail sales excluding cars were also stronger than expected, +1.9% compared to the market forecast of 1.6% (m/m). But the Canadian dollar ended the day lower due to lower oil prices.

Trading recommendations

• Support levels: 1.2862,1.2781
• Resistance levels: 1.2934,1.3006,1.3085,1.3154

In terms of technical analysis, the trend on the USD/CAD currency pair is bearish. At the moment, the price is forming a balance and is trading at the levels of the moving lines. The MACD indicator has become inactive. Under such market conditions, it is best to consider sell deals from the resistance level of 1.2934, but with confirmation. Buy trades should be viewed on the lower time frames from the support level of 1.2862, but only with confirmation and short targets.

Alternative scenario:

if the price breaks out and consolidates above the 1.3085 resistance level, the uptrend will likely resume.