The Analytical Overview of the Main Currency Pairs on 2023.07.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0955
• Prev. Close: 1.1000
• % chg. over the last day: +0.41%

The US dollar fell on Monday, extending last Friday’s losses after softer-than-expected nonfarm payrolls data. Traders are now focusing on the US inflation data that will be released on Wednesday. This data will help to understand the US Federal Reserve’s future actions and the US dollar’s future trajectory. But even if inflation falls, it won’t be enough to prevent the Fed from raising rates this month, but it will be enough to prevent expectations from shifting further in a more hawkish direction. Today’s German inflation data could help strengthen the euro if the indicators point to resilience.

Trading recommendations

• Support levels: 1.0979,1.0958,1.0925,1.0869,1.0834,1.0795,1.0719,1.0688
• Resistance levels: 1.1012,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading above the moving averages but has reached the resistance level. The MACD indicator is in the positive zone, but there are signs of divergence. There is a high probability of a correction. Under such market conditions, buy trades can be considered from the support level of 1.0979 or 1.0958, but with additional confirmation on the lower time frames. Sell deals trades can be considered from the resistance level of 1.0976 or 1.1012 but with confirmation in the form of a structure change on the lower time frames.

Alternative scenario:

if the price breaks through the support level of 1.0866 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2828
• Prev. Close: 1.27471.2860
• % chg. over the last day: +0.25%

Labor market data will be released in the UK today. Strong growth in average wages, falling jobless claims, and employment growth are expected. For the Bank of England, such a setup would be ideal to continue the tightening campaign. Any surprise data in the direction of worsening conditions in the labor market will be regarded by investors as an obstacle for the Bank of England, which will be negatively reflected in the quotations of the pound.

Trading recommendations

• Support levels: 1.2797,1.2682,1.2646,1.2583,1.2539,1.2486,1.2421,1.2391
• Resistance levels: 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 steadily growing, breaking through all resistance levels. The MACD indicator is in the positive zone, but there are the first signs of divergence. The most optimal level for buying is 1.2797, but with confirmation. Sell trades are best considered from the level to look for on intraday time frames but with confirmation in the form of a change of structure.

Alternative scenario:

if the price breaks through the support level 1.2762 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 142.13
• Prev. Close: 141.32
• % chg. over the last day: -0.57%

The Japanese yen outperformed its major competitors. Over the past two days, USD/JPY has fallen by about 2%, which was the best performance for the yen since May. The yen’s strengthening coincided with the weakening of long-term US bond yields and the falling dollar. The 10-year Treasury yield fell nearly 1.8%, the worst performance since June 20. Apparently, traders are expecting a drop in US inflation this week and a softer stance from the US Fed. The Fed’s softer stance will have a negative impact on the dollar, so the yen may strengthen even more.

Trading recommendations

• Support levels: 140.18,139.32
• Resistance levels: 141.25,142.08,143.66,144.50,144.72,145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is in a downtrend now. The MACD indicator is in the negative zone, but there are the first signs of divergence. The most suitable level for buying will be 140.18, but with confirmation on the lower time frames in the form of a false breakdown or the initiative of buyers. Sell trades can be considered from the resistance level of 141.25, but also with confirmation on the lower time frames.

Alternative scenario:

if the price fixes above the 144.50 resistance level, with a high probability, the uptrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3271
• Prev. Close: 1.3278
• % chg. over the last day: +0.05%

The Bank of Canada will announce its July monetary policy decision on Wednesday. Markets expect the Central Bank to raise borrowing costs by 25 basis points to 5.0%, the highest level since 2001, as part of an ongoing battle against persistently high price pressures. But traders should not primarily focus on the rate decision itself but rather on further forecasts and general comments on the economic outlook. Given the robust labor market, the Bank of Canada may leave the door open for further hikes, which would be an additional strengthening factor for the Canadian dollar.

Trading recommendations

• Support levels: 1.3243,1.3184,1.3145,1.3116
• Resistance levels: 1.3329,1.3383,1.3426,1.3461,1.3503

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is correcting to the nearest support level. The MACD indicator is negative, with a seller’s pressure inside the day. It is better to buy from the level of 1.3242 but with confirmation on the lower time frames in the form of buyers’ reactions to the level. Sell trades are best sought on intraday time frames from moving averages or from the 1.3329 level but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1.3202, the downtrend will resume with a high probability.