The Analytical Overview of the Main Currency Pairs on 2023.05.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0719
• Prev. Close: 1.0725
• % chg. over the last day: +0.06%

Friday’s data showed that US consumer spending rose more than expected in April, improving the economy’s growth prospects in the second quarter of 2023. At the same time, PCE price inflation accelerated again. This indicator is on the US Federal Reserve’s list of monitored inflation indicators. Against this backdrop, the probability of a 0.25% rate hike at the June meeting rose from 50% to 64.2%. This situation will contribute to the strengthening of the dollar index.

Trading recommendations

• Support levels: 1.0711
• Resistance levels: 1.0758,1.0800,1.0836,1.0875,1.0904,1.0956,1.0995

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price reached the daily support level. The MACD indicator is in the negative zone, but the momentum indicates increasing bullish pressure. Under such market conditions, buy trades can be considered from the support level of 1.0711, but only with confirmation, as the level has already been tested. Sell deals could be considered from the resistance level of 1.0758 but with confirmation in the form of a sellers’ reaction.

Alternative scenario:

if the price breaks through the resistance level of 1.0800 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2320
• Prev. Close: 1.2348
• % chg. over the last day: +0.22%

British consumers accelerated the pace of their spending last month, and three months’ worth of sales rose to their highest level since mid-2021. The economic environment remains challenging for many, but consumer confidence is slowly improving from the record lows seen last year. Analysts believe that consumption growth has come at the expense of rising wages, which partially offset the decline in the cost of living. But further Bank of England rate hikes will hit the finances of many people with fixed-rate mortgages who have not yet been affected by rising borrowing costs.

Trading recommendations

• Support levels: 1.2322
• Resistance levels: 1.2386,1.2415,1.2468,1.2546,1.2569,1.2612

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is forming a wide-volatile corridor. The MACD indicator has become inactive, but the sellers’ pressure has disappeared. The most optimal support level for buy is 1.2322, but with confirmation because the level has already been tested. It is better to look for sell deals from the resistance level of 1.2386 but with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the 1.2468 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 140.04
• Prev. Close: 140.53
• % chg. over the last day: +0.35%

The latest economic data showed that Tokyo’s core CPI fell to 3.2% y/y from 3.5%. But the overall inflation index reached a 40-year-high. The Tokyo data, seen as a leading indicator of nationwide trends, showed that companies continue to pass on rising costs to households, a sign that inflationary pressures may last longer than the Bank of Japan (BOJ) had planned. The prospect of higher wages is pushing more firms to offset rising labor costs by raising prices. This increases the likelihood that the Bank of Japan will abandon the soft monetary policy.

Trading recommendations

• Support levels: 139.83,138.86,138.00,137.54,136.52,135.66,135.15,134.67
• Resistance levels: 140.70,141.07

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is moving to the daily resistance level of 141.07. The MACD indicator is in the positive zone but with signs of overbuying and divergence on several time frames. The support level of 139.83 can be used to join the bullish trend, but the targets should be short as the bullish potential is limited. Sell trades can be considered from the resistance level of 140.70 or 141.07 but with confirmation in the form of a bearish initiative.

Alternative scenario:

if the price fixes below the 138.00 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3633
• Prev. Close: 1.3614
• % chg. over the last day: -0.14%

Canada’s fiscal year 2022/23 budget deficit narrowed to CAD 41.31 billion ($30.89 billion) from CAD 95.57 billion in the previous year. Economic recovery from the pandemic boosted tax revenues while budget spending declined. Revenues rose by 8.6% between April 2022 and March 2023, reflecting broad-based improvements in revenue streams due to economic growth and the weakening financial and economic impact of COVID-19. This is positive for the Canadian dollar.

Trading recommendations

• Support levels: 1.3523,1.3484,1.3468,1.3436,1.3397,1.3267
• Resistance levels: 1.3611,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is bullish. The price reached the daily resistance level of 1.3647, where the sellers showed their interest. A price corridor is forming. The MACD indicator has become negative. Under such market conditions, it is better to look for buy deals from the support level of 1.3524 or from the moving lines, but with confirmation in the form of buyers’ initiative on the lower time frames. Selling is better to consider from the resistance level of 1.3611, but only with a confirmation in the form of a false breakout.

Alternative scenario:

by JustMarkets, 2023.05.29