The Analytical Overview of the Main Currency Pairs on 2023.06.20

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0929
• Prev. Close: 1.0920
• % chg. over the last day: -0.08%

The ECB officials are unanimously discussing a rate increase at the July meeting. Yesterday, ECB representatives Lane and Kasimir pointed to the advisability of raising the rate in July by another 0.25% and in September to base their decisions on the new data on core inflation and the labor market. It should be noted that the probability of a rate hike by the Fed at the July meeting is 74%. The consensus so far is that both central banks plan to raise the rate next month. Thus, fundamentally, a wide price corridor will be formed on the EUR/USD currency pair, as there is no prevailing side right now.

Trading recommendations

• Support levels: 1.0845,1.0785,1.0719,1.0688,1.0659,1.0634
• Resistance levels: 1.0942,1.0956,1.0968,1.0995

The trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. The price tested the resistance level of 1.0956, where the sellers showed a reaction. The price is now forming a narrow corridor at the levels of the moving averages. The MACD indicator has become inactive. Under such market conditions, buy trades can be considered after a small correction from the support level of 1.0845, but only with additional confirmation on the lower time frames. Sell deals can be considered from the resistance level of 1.0942 or 1.0968 but also with confirmation.

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: 1.2816
• Prev. Close: 1.2791
• % chg. over the last day: -0.19%

According to analysts, sustained high inflation and accelerating wage growth leave the Bank of England no choice but to raise the bank rate at Thursday’s meeting. Market consensus suggests another 25 basis point increase, bringing the benchmark rate to 4.75%. Quantitative tightening (QT) also continues to work, and the planned £80 billion reduction in securities reserves to £758 billion in the bank asset purchase facility (APF) by November remains in place. All these factors will contribute to the strengthening of the pound in the coming weeks.

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 at the level of the moving averages. The MACD indicator has become inactive, but the divergence remains. There is a high probability of a small correction. The most optimal level to buy is the 1.2677 level but with confirmation. It is best to look for sell deals after an impulse return under the level of 1.2801.

Alternative scenario:

if the price breaks through the support level 1.2538 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 141.68
• Prev. Close: 141.98
• % chg. over the last day: +0.20%

The situation on the USD/JPY currency pair has not changed significantly. Fundamentally, the Japanese yen is under pressure due to the divergent monetary policies of the US Federal Reserve and the Bank of Japan. On the other hand, the Japanese government does not intend to tolerate strong depreciation of the national currency and is ready to intervene if necessary, as happened last year when it took three interventions to stop the price decline.

Trading recommendations

• Support levels: 141.23,140.16,139.85,139.23,138.81
• Resistance levels: 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, there are the first signs of divergence, but the price is likely to make one more bullish wave. To buy, it is best to wait for a correction. The most suitable support level would be 141.23 or 140.16 but with confirmation on the lower time frames. Sell trades can be considered from a resistance level of 142.45 but with confirmation in the form of a bearish initiative.

Alternative scenario:

if the price fixes below the 139.85 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3193
• Prev. Close: 1.3208
• % chg. over the last day: +0.11%

The Canadian dollar is a commodity and depends on the USD Index and oil prices. The dollar index was not trading yesterday, while oil prices were down on Monday. As a result, the USD/CAD currency pair is trading in a corridor. China cut its benchmark lending rates on Tuesday after a similar cut in medium-term lending last week to support a weak economic recovery. This could boost demand from China, leading to higher oil prices and a stronger Canadian currency in the medium term.

Trading recommendations

• Support levels: 1.3196,1.3135
• Resistance levels: 1.3240,1.3293,1.3317,1.3357,1.3384,1.3461,1.3503

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. The MACD indicator became positive, and the divergence remains on several time frames. It is best to look for buy deals from the level of 1.3226, but only after the price impulsively returns beyond the level. Sell trades are best sought from the resistance level of 1.3240 or 1.3293 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3355, the uptrend will resume with a high probability.