The Analytical Overview of the Main Currency Pairs on 2023.05.08

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1007
• Prev. Close: 1.1018
• % chg. over the last day: +0.10%

Friday’s data showed that the US labor market remains strong. The economy added 253,000 jobs (forecast +181,000). The unemployment rate dropped from 3.5% to 3.4%. The unexpected increase in US hiring and payrolls last month raises the possibility that the Federal Reserve will hold interest rates high longer and possibly keep the possibility of an 11th straight hike in June.

Trading recommendations

• Support levels: 1.1007,1.0966,1.0963,1.0942,1.0895,1.0830,
• Resistance levels: 1.1056,1.1075,1.1094,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bullish. On Friday, the price reached the priority change level, but buyers defended the level, and as a result, the price rebounded sharply. The price is trading above the moving averages again. The MACD indicator returned to the positive zone. Under such market conditions, buy trades are best considered from the support level of 1.1007. Sell deals can be considered from the resistance level of 1.1056, but only with confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0966 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2571
• Prev. Close: 1.2630
• % chg. over the last day: +0.47%

The UK Construction PMI Index rose from 50.7 to 51.1. The index has held above a neutral 50.0 for three months in a row, but a deeper analysis of the report suggests only a slight overall expansion in construction activity. Increases in commercial work and civil engineering helped offset a sharp decline in residential construction. Input price pressures also eased in April, and the rate of cost inflation was the lowest in nearly two and a half years. This is a factor of weakness for the British pound.

Trading recommendations

• Support levels: 1.2598,1.2539,1.2508,1.2421,1.2386,1.2343,1.2320,
• Resistance levels: 1.2643

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price reached a yearly high in Monday morning trading. At the moment, the price is trading above the moving average levels but has hit the daily resistance level of 1.2643. The MACD indicator is in the positive zone, but there are signs of divergence on several time frames. The best level to buy is 1.2598, or in case of a stronger decline, 1.2539. It is best to look for sell trades on intraday time frames from the resistance level of 1.2643 but with confirmation in the form of a false breakout and a change in the structure on the lower time frames.

Alternative scenario:

if the price breaks down through the 1.2509 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 134.24
• Prev. Close: 134.82
• % chg. over the last day: +0.43%

Minutes from Monday’s March policy meeting showed that numerous BOJ board members believe the Bank of Japan (BOJ) needs to be careful about the risk of accelerating inflation, but there are positive signs that inflation is moving towards the 2% target. Many participants also stated that there is “extremely high” uncertainty about Japan’s economic outlook, which calls for continued soft monetary policy.

Trading recommendations

• Support levels: 134.29,133.48,133.03,132.70,132.02,131.82,130.62
• Resistance levels: 136.41,136.85,137.26,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. At the moment, the price has corrected to the average lines and is forming a downtrend continuation pattern. The MACD indicator is in the positive zone, but there are signs of weakness of buyers. Under such market conditions, it is best to look for buy deals from the support level of 134.29 or, in case of a deeper decline, from the level of 133.48, but with a confirmation in the form of a false breakdown. Sell trades can be considered in case of an impulse breakdown of the uptrend line.

Alternative scenario:

if the price fixes above the 137.26 resistance level, the uptrend will resume with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3535
• Prev. Close: 1.3375
• % chg. over the last day: -1.19%

Friday’s labor market data showed that employment in Canada increased by 41,000 jobs. The unemployment rate remained at 5%, unchanged from December 2022. On an annualized basis, average hourly earnings rose to 5.2% in April. The strong labor market is a strengthening factor for the Canadian currency. Oil prices rose on Friday as recession fears began to subside, which also gave the Canadian dollar some confidence. It should be noted that the Canadian dollar is a commodity currency.

Trading recommendations

• Support levels: 1.3366,1.3341,1.3267
• Resistance levels: 1.3484,1.3551,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to a bearish one. The price broke through the priority change level and consolidated below. The MACD indicator is in the negative zone, there is seller pressure inside the day, but there are the first signs of divergence. It is better to look for buy trades from the support level of 1.3366 but with confirmation in the form of reverse initiative. At the moment, it is not observed. Sell positions are better to look for from the resistance level of 1.3484 or from the moving averages but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3589, the uptrend will likely be renewed.