The Analytical Overview of the Main Currency Pairs on 2023.07.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1127
• Prev. Close: 1.1225
• % chg. over the last day: +0.88%

The minutes of the June ECB meeting emphasized its hawkish stance. The June ECB meeting was marked not only by another rate hike but also by the actual preliminary announcement of a rate hike in July by ECB President Christine Lagarde. The main reasons for maintaining a hawkish stance were the upward revision of the ECB’s inflation forecast for 2024 and the still optimistic outlook for economic growth. The ECB concluded that the bank needs at least two consecutive interest rate hikes in June and July to achieve its inflation target.

Trading recommendations

• Support levels: 1.1071,1.1001,1.0958,1.0925,1.0866
• Resistance levels: 1.1272

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading above the moving averages, confidently breaking through all resistance levels. The MACD indicator is in the positive zone, but the divergence is observed on several time frames, and the price is overbought. There is a high probability of correction, but the price is likely to reach the resistance level of 1.1272. With these market conditions, buy trades can be considered from the trending moving averages. Sell deals can be considered from the resistance level of 1.1272 but with confirmation in the form of a pattern change on the lower time frames.

Alternative scenario:

if the price breaks through the support level of 1.0957 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2981
• Prev. Close: 1.27471.3134
• % chg. over the last day: +1.17%

The USD hit a 15-month high as markets believe that the Federal Reserve is close to ending its interest rate hike cycle due to falling inflation. The US producer prices remained flat in June and the annualized gain in producer inflation was the lowest in nearly three years. In turn, the Bank of England, at least two times, intends to raise the rate. Due to the decreasing interest rate differential, the British pound continues to strengthen against the dollar.

Trading recommendations

• Support levels: 1.3000,1.2925,1.2848,1.2797,1.2762,1.2646
• Resistance levels: 1.3139,1.3308

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 1.3000, but with confirmation. Sell trades are best considered when the trend changes on the lower time frames, as there are no significant resistance levels nearby.

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: 138.41
• Prev. Close: 138.04
• % chg. over the last day: -0.26%

As the US Fed is approaching the end of its tightening cycle, and Japan is starting to create conditions for inflation growth, which is essential for the BoJ to abandon its loose monetary policy, the medium-term trend is shifting towards a stronger JPY. As soon as the Bank of Japan hints at the first signs of normalization of monetary policy, the Japanese yen will accelerate its growth against the dollar. But at the moment, the difference in interest rates is in favor of the dollar index.

Trading recommendations

• Support levels: 137.25,136.56
• Resistance levels: 139.43,140.18,142.08,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is in a downtrend. 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 137.25 but with confirmation on the lower timeframes in the form of buyers’ initiative and change of structure on the lower timeframes. Sell trades can be considered from the resistance level of 139.43 or 140.18, but also with confirmation on the lower timeframes.

Alternative scenario:

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

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3178
• Prev. Close: 1.3108
• % chg. over the last day: -0.53%

The Canadian dollar is a commodity currency and depends not only on the monetary policy of the Bank of Canada but also on the dollar index and oil prices. The dollar index hit a 15-month low, while oil prices rose to a 10-week-high due to tightening supply and soft inflation in the United States. This situation is favorable for the strengthening of the Canadian dollar.

Trading recommendations

• Support levels: 1.3108
• Resistance levels: 1.3145,1.3208,1.3242,1.3303,1.3329,1.3383,1.3426

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price continues to decline. The MACD indicator is in the negative area, but the divergence is increasing. There are also signs of oversold conditions. Buy deals are best to look for from the level of 1.3108 but with confirmation on the lower timeframes in the form of a change of structure. Sell trades are better to look for on intraday timeframes from moving averages or from the 1.3145 level but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3289, the uptrend will be renewed with a high probability.