The Analytical Overview of the Main Currency Pairs on 2023.07.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1048
• Prev. Close: 1.1085
• % chg. over the last day: +0.33

The US Fed expectedly raised the rate yesterday by 0.25% to 5.25%, leaving the door open for further hikes. The US Central Bank also signaled that it needs to see new signs of slowing price pressures in order to declare victory over inflation. The European Central Bank (ECB) meets today, where a 0.25% rate hike is also expected. But the focus is on the Central Bank’s plans for September, and markets are divided on whether there will be another rate hike, or the ECB will hit the pause button. Given the strong labor market, there is room for the ECB to raise rates further, but ECB chief Christine Lagarde is likely to reiterate that future decisions will be based on incoming economic data.

Trading recommendations

• Support levels: 1.1072,1.1001,1.0958,1.0925,1.0866
• Resistance levels: 1.1110,1.1147,1.1198,1.1240,1.1272,1.1334

The trend on the EUR/USD currency pair on the hourly time frame is bearish. But yesterday showed the initiative of buyers, after which the price began to trade above the moving averages. The MACD indicator became positive. Under such market conditions, buy trades can be considered from the support level of 1.1072 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 1.1110 or 1.1147 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.1147 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2900
• Prev. Close: 1.27471.2941
• % chg. over the last day: +0.32%

Falling UK consumer prices reduced the pressure on the Bank of England to aggressively raise rates further. Services inflation, a key indicator for the Bank of England, fell last month, which should allow the Bank to return to a slower pace of 0.25% hikes. Unfortunately, the Bank of England has largely shied away from giving clear hints about future policy, but economic models indicate that the country’s inflation will continue to fall and the economy will slowly slip into recession, so the Bank of England doesn’t have much room to maneuver. The final rate is expected this year in the range of 5.5%-5.75% (2-3 rate hikes of 0.25% from now), so the pound sterling still has more room to grow, unlike the US dollar and the euro.

Trading recommendations

• Support levels: 1.2862,1.2802,1.2762,1.2646
• Resistance levels: 1.2963,1.3011,1.3072,1.3140,1.3308

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish but close to change. The price is trading above the levels of moving averages, and the initiative of buyers is present. The MACD indicator is in the positive zone with no signs of reversal. The most optimal level for buying is 1.2862 but with confirmation on the lower time frames. Sell trades are best considered after a false breakout of 1.2963 level but with confirmation in the form of sellers’ initiative on the lower time frames.

Alternative scenario:

if the price breaks through the resistance level 1.2963 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 140.89
• Prev. Close: 140.23
• % chg. over the last day: -0.47%

Japan’s factory inflation slowed down in June. Japanese companies remain reticent to pass on rising labor costs despite a robust labor market. The service price index, which measures the prices companies charge each other for services, was 1.2% year-on-year, slowing down from a revised 1.7% in May. This increases the likelihood that the Bank of Japan will maintain its soft monetary policy settings this Friday.

Trading recommendations

• Support levels: 139.60,139.09,138.49,137.93,137.25,136.56
• Resistance levels: 140.21,140.70,142.61,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price has been corrected for the last three days. The price is trading below the moving averages. The MACD indicator is in the negative zone, and there is weak selling pressure. The most suitable level for buy deals is 139.60 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the resistance level of 140.21 or 140.71 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: 1.3164
• Prev. Close: 1.3206
• % chg. over the last day: +0.32%

Crude oil prices retreated from three-month highs on Wednesday after the Fed raised rates but still remained trading at the highs of the week. Oil prices are expected to rise in the coming weeks, following tensions in global markets after supply cuts by the world’s biggest producers. Some OPEC countries have recently reported lower production levels, and analysts expect the supply cuts could last until the end of September. The Canadian dollar, being a commodity currency, will strengthen due to this.

Trading recommendations

• Support levels: 1.3167,1.3153,1.3131,1.3108
• Resistance levels: 1.3200,1.3243,1.3329,1.3383,1.3426

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. Such balance accumulation will demonstrate an impulse shot sooner or later. The MACD indicator has become negative, and there is weak selling pressure intraday. Buying is best sought from the support level of 1.3167 or 1.3153 but with confirmation on the lower time frames. Sell trades are best sought from the resistance level of 1.3200 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.