The Analytical Overview of the Main Currency Pairs on 2023.07.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1000
• Prev. Close: 1.1007
• % chg. over the last day: +0.06%

Inflation data for June will be released today in the United States. Inflation is expected to fall from 5.3% to 5.0% year-over-year. Core inflation (excluding food and energy prices) is also expected to fall from 4% to 3.1% year-over-year. 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. Given the recent dollar decline, investors expect a softer stance from the US Fed after the release amid the imminent end of the tightening cycle.

Trading recommendations

• Support levels: 1.0992,1.0958,1.0925,1.0867,1.0834,1.0795,1.0719,1.0688
• Resistance levels: 1.1024,1.1092,1.1185

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 the divergence is observed in several time frames. There is a high probability of a correction. Under such market conditions, buy trades can be considered from the support level of 1.0992 or 1.0958, but with additional confirmation on the lower time frames. Sell trades can be considered from the resistance level of 1.1024 or 1.1092 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: 1.2856
• Prev. Close: 1.27471.2930
• % chg. over the last day: +0.57%

On Wednesday, the US dollar fell to a two-month low against its major peers ahead of the release of key US inflation data, while sterling hit a 15-month high on expectations that the Bank of England (BoE) will not raise rates anytime soon. The latest labor market data came in mixed, with jobless claims rising by 25.7K over the last month (forecast +20.5K), the wage rate rising from 6.7% to 6.9% y/y, and the unemployment rate worsening from 3.8% to 4.0%. The UK labor market is starting to cool down, but there is still room for 1-2 rate hikes.

Trading recommendations

• Support levels: 1.2848,1.2797,1.2682,1.2646,1.2583,1.2539,1.2486,1.2421
• 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 the divergence is getting stronger. The most optimal level for buying is 1.2848 or 1.2797 but with confirmation. Sell trades are best considered from the resistance level of 1.2991 but with confirmation in the form of a structure change.

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: 141.380
• Prev. Close: 140.341
• % chg. over the last day: -0.74%

Japan’s changing views on price appreciation opened the door for the Bank of Japan’s policy adjustment. Japanese consumers have started spending more on goods and services, finally paving the way for the Central Bank to wind down its massive monetary policy stimulus. The world’s third-largest economy is seeing the first signs of demand-driven inflation, with a growing number of hotels, restaurants, and retailers raising prices for services without losing consumers willing to pay more in anticipation of higher wages.

Trading recommendations

• Support levels: 139.43,138.81
• Resistance levels: 140.18,141.25,142.08,142.99,143.66,144.50,144.72,145.00.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is in a downtrend now. The price continues to decline, breaking through all support levels. The MACD indicator is in the negative zone, but the divergence is getting stronger. The most suitable level for buying will be 139.43, but with confirmation on the lower time frames in the form of buyers’ initiative and change of structure on the lower time frames. Sell trades can be considered from the resistance level of 140.18 or 141.25, but also with confirmation on the lower time frames.

Alternative scenario:

if the price fixes above the 142.99 resistance level, with a high probability, the uptrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3276
• Prev. Close: 1.3229
• % chg. over the last day: -0.35%

The Bank of Canada will hold its monetary policy meeting today. The BoC is expected to raise the interest rate by 0.25% to 5%, which would be the highest level in 22 years. Most of Canada’s largest commercial banks are predicting that this rate hike will be the last in this cycle. But, policymakers will likely not openly declare that they have ended the tightening cycle and will be inclined to leave the threat of further rate hikes on the table to assess how the economy is coping with rising interest payments. The decision will also be accompanied by new economic projections.

Trading recommendations

• Support levels: 1.3202,1.3184,1.3145,1.3116
• Resistance levels: 1.3243,1.3329,1.3383,1.3426,1.3461,1.3503

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. But the price corrected too deep and reached the priority change level. There is a high probability of medium-term trend change. The MACD indicator is in the negative area, and there is a divergence within the day. It is better to buy from the level of 1.3202 or 1.3184 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 the moving averages or from the level of 1.3243 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.