The Analytical Overview of the Main Currency Pairs on 2023.06.16

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0826
• Prev. Close: 1.0944
• % chg. over the last day: +0.11%

The European Central Bank (ECB) raised interest rates for the eighth time in a row and signaled further policy tightening. The rate was raised by 0.25% from 3.75% to 4.00%. At the press conference, ECB head Christine Lagarde indicated that the ECB is leaving the door open for further hikes. Economists expect another ECB rate hike of 25 basis points in July or September. The interest rate differential between the US Fed and the ECB has narrowed, and this is a fundamental factor for EUR/USD quotes to rise.

Trading recommendations

• Support levels: 1.0845,1.0785,1.0719,1.0688,1.0659,1.0634
• Resistance levels: 1.0956,1.0968,1.0995

Alternative scenario:

The EUR/USD currency pair trend on the hourly time frame has changed to bullish. The price is steadily increasing, but it is approaching the resistance zone. The MACD indicator is in the positive zone but in the overbought zone. Under such market conditions, buy deals can be considered after a small correction from the 1.0845 support level, but only with additional confirmation on the lower time frames. Sell deals can be considered from the resistance level of 1.0956 or 1.0968 but with confirmation in the form of a change in the structure on the lower time frames.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair trend on the hourly time frame has changed to bullish. The price is steadily increasing, but it is approaching the resistance zone. The MACD indicator is in the positive zone but in the overbought zone. Under such market conditions, buy deals can be considered after a small correction from the 1.0845 support level, but only with additional confirmation on the lower time frames. Sell deals can be considered from the resistance level of 1.0956 or 1.0968 but with confirmation in the form of a change in the structure on the lower time frames.

Alternative scenario:

if the price breaks through the support level of 1.0785 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2653
• Prev. Close: 1.2784
• % chg. over the last day: +1.04%

The dollar index has an inverse correlation with the European currency. The euro growth on the background of the ECB rate hike led to a sharp drop of the dollar against major currencies, including the British pound. Today the UK will publish its quarterly survey of British consumers on inflation and rates. Falling consumer confidence may somewhat deter the British currency from further gains.

Trading recommendations

• Support levels: 1.2677,1.2627,1.2539,1.2486,1.2421,1.2391,1.2349
• Resistance levels: 1.2801,1.2991

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, the pressure of buyers remains, but the price is technically overbought. The best level to buy is 1.2677 but with confirmation. It is better to look for sell deals from the resistance level of 1.2801 but with a confirmation in the form of reverse initiative.

Alternative scenario:

if the price breaks through the support level 1.2486 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 140.03
• Prev. Close: 140.26
• % chg. over the last day: +0.16%

Despite stronger-than-expected inflation, the Bank of Japan on Friday kept its short-term interest rate target at 0.1% and the zero cap on 10-year bond yields set under its Yield Curve Control Policy (YCC). The central bank also maintained its view that inflation would slow later this year and its promise to “patiently” maintain large-scale stimulus, confirming Governor Kazuo Ueda’s recent announcement that he would not rush to phase out stimulus.

Trading recommendations

• Support levels: 140.16,139.85,139.23,138.81
• Resistance levels: 141.24,142.45

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the levels of moving averages. The MACD indicator is in the positive zone but without any signs of prevailing buyers. To buy, it is best to wait for a small correction. It is best to use the support level of 140.16 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 141.24, but with confirmation in the form of a bearish initiative, as the level has already been tested.

Alternative scenario:

if the price fixes below the 139.32 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3320
• Prev. Close: 1.3219
• % chg. over the last day: -0.76%

Canadian home sales rose in May, rising by 5.1% (m/m). But the ratio of sales to new applications, a measure of market tightness, remained relatively unchanged from April. Keep in mind that the Canadian dollar is a commodity currency and is highly correlated with instruments like the dollar index and oil. Oil futures were up by 3% yesterday on strong China data and a weaker US dollar. A weaker dollar makes oil cheaper for holders of other currencies, which may increase the demand for oil.

Trading recommendations

• Support levels: 1.3293,1.3263
• Resistance levels: 1.3344,1.3384,1.3461,1.3503,1.3589,1.3647,1.3667

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 below the moving averages but reached the support level. The MACD indicator is in the negative zone, but divergence persists on several timeframes. Buying is best sought from the support level of 1.3212, but only with confirmation in the form of the buyers’ initiative on the lower time frames. It is better to look for sell deals from the resistance level of 1.3293 or 1.3317 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 1.3384, the uptrend will resume with a high probability.