The Analytical Overview of the Main Currency Pairs on 2023.07.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0909
• Prev. Close: 1.0878
• % chg. over the last day: -0.28%

Policymakers from advanced economies continue to show a concerted bias towards further interest rate increases, with both the US Federal Reserve and the European Central Bank poised to raise interest rates later this month. Thus, the interest rate differential will not change. Fundamentally, this will benefit the dollar index as the overall US Fed rate (5.25%) is higher than the ECB rate now (4.0%).

Trading recommendations

• Support levels: 1.0858,1.0785,1.0719,1.0688,1.0659,1.0634
• Resistance levels: 1.0933,1.0976,1.0995,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is now trading at the level of the moving averages. The MACD indicator has become inactive. Inside the day, the bias is bearish, but the price is approaching the buying zone. Under such market conditions, buy trades can be considered from the support level of 1.0858 but with additional confirmation on the lower time frames. Sell deals can be considered from the resistance level of 1.0933 or 1.0976, but with confirmation in the form of a false breakout since the levels have already been tested.

Alternative scenario:

if the price breaks through the support level of 1.0845 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2681
• Prev. Close: 1.27471.2712
• % chg. over the last day: +0.24%

Analysts expect UK inflation to fall sharply before the end of the year due to a 20% cut in marginal energy prices from July 1, and as the existing rate hikes have a negative impact on the economy by reducing demand and employment. But officials at the Bank of England’s Monetary Policy Committee expect the rate to peak around 6% by the end of 2023 and hold at least through the first quarter of 2024. The current UK interest rate level is 5%, which means an increase of another full percentage point before the end of the year.

Trading recommendations

• Support levels: 1.2647,1.2583,1.2539,1.2486,1.2421,1.2391,1.2349
• Resistance levels: 1.2756,1.2836

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 on the lines of the moving averages, forming a flat structure. The MACD indicator has become inactive, but the divergence indicates the weakness of the buyers. The best level to buy is 1.2647, but with confirmation. It is best to consider sell deals from the resistance level of 1.2756 but also with confirmation on the lower time frames in the form of a false breakout.

Alternative scenario:

if the price breaks through the support level 1.2583 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 144.68
• Prev. Close: 144.46
• % chg. over the last day: -0.15%

The slight appreciation of the Japanese yen in recent days is happening amid investors’ and traders’ concerns over possible intervention by the Japanese government. Last year, when the price of 145 Japanese yen to one dollar reached, the Bank of Japan, on the orders of the government, carried out a currency intervention. Over a short period of time, there were three interventions which strengthened the currency from 148 to 129 yen per dollar. At the moment, investors who were buying USD/JPY are fixing their positions, as a result of which the currency pair is consolidating.

Trading recommendations

• Support levels: 143.66,143.27,142.37,141.60,141.23,140.16,139.85,
• Resistance levels: 144.72,145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is forming a flat structure right before the important resistance level 145. The MACD indicator has become inactive. The most suitable level to buy would be 143.66 or 143.27 in a deeper correction. Sell trades can be considered from the resistance level of 144.72, but with confirmation on the lower time frames, as the level has already been tested.

Alternative scenario:

if the price fixes below the 143.27 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3245
• Prev. Close: 1.3222
• % chg. over the last day: -0.17%

Canada’s manufacturing PMI index fell to 48.8 from 49 in June, recording simultaneous declines in output, new orders, and employment. Firms noted that market demand was subdued amid reports that high-interest rates and an uncertain macroeconomic outlook had delayed customer spending decisions. Companies also noted that new export orders were down again. For the Bank of Canada, this is a signal that high-interest rates are starting to negatively affect business activity.

Trading recommendations

• Support levels: 1.3184,1.3145,1.3116
• Resistance levels: 1.3260,1.3293,1.3317,1.3357,1.3384,1.3461,1.3503

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of the moving averages with a slight sellers’ pressure. The MACD indicator is in the negative zone, but the momentum is already bullish. Buying is best sought from the level of 1.3184 but with confirmation on the lower time frames in the form of buyers’ reaction to the level. Sell trades are best sought on intraday time frames from the level of 1.3260 but with confirmation in the form of a seller’s initiative.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1.3116, the downtrend will resume with a high probability.