The Analytical Overview of the Main Currency Pairs on 2023.06.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0778
• Prev. Close: 1.0748
• % chg. over the last day: -0.28%

This week, currency traders will focus on three important events: the US inflation report for May on Tuesday, the June FOMC decision on Wednesday, and the European Central Bank’s monetary policy statement on Thursday. These catalysts are likely to set the trading tone for the EUR/USD pair in financial markets. The US inflation is expected to continue its downward trend, increasing the likelihood of a pause by the US Federal Reserve on Wednesday. With a 100% chance that the ECB will raise rates on Thursday, there will be a narrowing of the interest rate differential between the US Fed and the ECB. This will be a bullish catalyst for EUR/USD in the medium term.

Trading recommendations

• Support levels: 1.0718,1.0688,1.0659,1.0634
• Resistance levels: 1.0762,1.0800,1.0836,1.0875,1.0904,1.0956

The trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. The price is correcting to the Fibonacci buying zone. The MACD indicator is in the negative zone, but sellers’ pressure is weak. Under such market conditions, buy trades can be considered from the support level of 1.0718, but only with additional confirmation on the lower time frames. Sell deals can be considered from the resistance level of 1.0762 or 1.0800 but with confirmation in the form of a false breakout and a change of the structure on the lower time frames.

Alternative scenario:

if the price breaks through the support level of 1.0688 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2552
• Prev. Close: 1.2578
• % chg. over the last day: +0.21%

The British pound ended the previous week in the plus, having demonstrated decent growth against a number of other currencies. Sterling was also more resilient on the strengthening dollar as expectations continue to rise that the Bank of England may have to raise rates more aggressively in the coming months to curb inflation. The UK inflation is expected to fall in the coming months, but current market forecasts of a further 100 basis point increase in the UK interest rate look very hawkish.

Trading recommendations

• Support levels: 1.2477,1.2420,1.2391,1.2349
• Resistance levels: 1.2583,1.2612

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 above the moving averages. The MACD indicator is in the positive zone, but the divergence is already observed in several time frames. Considering that the price has reached the resistance level, there is a high probability of a corrective wave. The most optimal level to buy is 1.2477 but with confirmation. It is best to look for sell deals from the resistance level of 1.2583 but with a confirmation in the form of a false breakout and a change of the structure on the lower time frames.

Alternative scenario:

if the price breaks through the support level 1.2420 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 138.85
• Prev. Close: 139.34
• % chg. over the last day: +0.35%

Bank of Japan Governor Kazuo Ueda said that corporate pricing in the country is changing, which could lead to higher inflation. At the same time, Ueda reiterated the central bank’s determination to maintain ultra-soft policies so that Japanese companies raise wages sufficiently to more than offset the burden on households from rising inflation. The BoJ is expected to maintain all monetary policy settings later this week, including the level of YCC yield curve control. Ueda also added that the Bank of Japan now expects core consumer inflation to slow below the bank’s 2% target in the second half of this fiscal year.

Trading recommendations

• Support levels: 138.94,138.80,138.00,137.54,136.52,135.66,135.15,134.67
• Resistance levels: 139.62,140.23,140.45,141.07

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish. The price is trading at the levels of the moving averages and forming a wide-volatile corridor. The MACD indicator has become inactive. The best way to buy is to use the support level of 138.94 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 140.23 but with confirmation in the form of a bearish initiative.

Alternative scenario:

if the price fixes below the 138.80 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3349
• Prev. Close: 1.3338
• % chg. over the last day: -0.08%

The Canadian economy ended its eight-month period of job growth with small job losses. The latest data in May showed a decline of 17.3k jobs for the month, with the unemployment rate rising from 5.0% to 5.2%. The job losses came from declines in the business, construction, and other support services sectors. While this drop in jobs is considered statistically insignificant, it is the first sign of a “cooling down” of the labor market. This will increase the likelihood that the Bank of Canada will not raise rates again this year.

Trading recommendations

• Support levels: 1.3321,1.3300,1.3267
• Resistance levels: 1.3411,1.3504,1.3589,1.3647,1.3667,1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is bearish. The price is trading at the level of moving averages, a price corridor is forming. The MACD indicator has become inactive, and the divergence on several time frames remains. There is a high probability of a corrective upward movement. It is better to buy from the support level of 1.3321 or 1.3300, but only with a confirmation in the form of a false breakdown and a change of the structure on the lower time frames. It is better to look for sell deals after a false breakout of the 1.3411 resistance level but with a confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3504, the uptrend will resume with a high probability.