The Analytical Overview of the Main Currency Pairs on 2023.07.25

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1121
• Prev. Close: 1.1064
• % chg. over the last day: -0.52%

The latest Eurozone business activity data was disappointing. Thus, the manufacturing sector’s business activity index fell from 43.4 to 43.7. In the service sector, the index fell from 52.0 to 51.5. This is a negative signal for the European currency because the worse the economy is performing, the less room the ECB has for further rate hikes. The ECB monetary policy meeting will take place this week, and economists believe that the ECB’s tone may shift to a dovish direction.

Trading recommendations

• Support levels: 1.1001,1.1058,1.1001,1.0958,1.0925,1.0866
• Resistance levels: 1.1147,1.1198,1.1240,1.1272,1.1334

The trend on the EUR/USD currency pair on the hourly time frame is bearish. There is still weak selling pressure in the market. The MACD indicator is in the negative zone, but there are signs of divergence. Under these market conditions, buy trades can be considered from the support level of 1.1058 but with confirmation as a false breakdown. Sell trades can be considered from the resistance level of 1.1147 or 1.1198 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.1240 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2842
• Prev. Close: 1.27471.2822
• % chg. over the last day: -0.16%

The UK private sector is beginning to show signs of the impact of the Bank of England’s interest rate hike. Recent data showed a significant slowdown in business activity growth. The manufacturing PMI fell from 46.5 to 45.0, while the service sector PMI fell from 53.7 to 51.5 and approached contraction territory (borderline 50). Such data complicates the process of policy tightening for the Bank of England. Analysts are once again making gloomy forecasts that the UK economy will slip into recession already this year.

Trading recommendations

• Support levels: 1.2802,1.2762,1.2646
• Resistance levels: 1.2905,1.2964,1.3011,1.3072,1.3140,1.3308

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is trading below the moving average lines but has reached the support level where buyers have shown a reaction. The MACD indicator is in the negative zone, but the divergence is getting stronger. There is a high probability of a corrective move to the upside. The most optimal level for buying is 1.2802 but with confirmation on the lower time frames. Sell trades are best considered after a false breakout of 1.2905.

Alternative scenario:

if the price breaks through the resistance level 1.3122 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 141.60
• Prev. Close: 141.47
• % chg. over the last day: -0.09%

Most analysts believe that the Bank of Japan will leave its policy settings unchanged this week, although some suggest that there is a possibility of an adjustment in the Yield Curve Control (YCC) program in the face of rising inflation. Any changes to the YCC would be seen as the start of a policy normalization cycle, regardless of how the Central Bank characterizes it, creating a positive backdrop for the Japanese yen to rise against its major peers. But if the BOJ continues to stick to its ultra-soft stance, refraining from engaging in any preliminary discussions on a change in the outlook, the yen could lose ground sharply.

Trading recommendations

• Support levels: 140.30,139.60,138.49,137.93,137.25,136.56
• Resistance levels: 142.61,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is moving steadily upward along the moving averages, and the buyers’ pressure remains. The MACD indicator shows no signs of reversal, and traders should expect at least one upward wave. The most suitable level for buying is 140.30 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the 142.61 resistance level but with confirmation in the form of a false breakout.

Alternative scenario:

if the price fixes above the 139.09 resistance level, with a high probability, the uptrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3215
• Prev. Close: 1.3167
• % chg. over the last day: -0.36%

The Canadian dollar is a commodity currency and depends on the main factors, such as the monetary policy of the Bank of Canada, the dollar index, and oil prices. As both the Bank of Canada and the US Fed are at the end of their tightening cycle, the USD/CAD pricing dynamics will be driven by the US dollar and oil. Oil prices rose yesterday to an April high amid bets that OPEC supply cuts will tighten market conditions. Rising oil prices are supporting the CAD.

Trading recommendations

• Support levels: 1.3158,1.3131,1.3108
• Resistance levels: 1.3192,1.3243,1.3329,1.3383,1.3426

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. Now the price is forming a wide-volatile price corridor. The MACD indicator has become negative, and there is selling pressure inside the day. It is better to buy from the support level of 1.3153 or 1.3196 but with confirmation in the form of buyers’ initiative. Sell trades are best sought from the resistance level of 1.3192 but better with confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1.3243, the uptrend will resume with a high probability.