The Analytical Overview of the Main Currency Pairs on 2023.07.28

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1077
• Prev. Close: 1.0976
• % chg. over the last day: -0.92%

The ECB raised the key interest rate by 25 bps to 4.25%. The accompanying monetary policy statement left the door open for further rate hikes. During the press conference, ECB President Christine Lagarde was adamant about not announcing anything in advance for September, leaving the door open not only for a rate hike but also for a pause. Lagarde remained evasive when asked about the possibility of a hike in September. This is a dovish sign, given that the ECB president has previously been quite hawkish when pushing for future rate hikes.

Trading recommendations

• Support levels: 1.0974,1.0925,1.0866
• Resistance levels: 1.1072,1.1102,1.1147,1.1198,1.1240,1.1272,1.1334

The trend on the EUR/USD currency pair on the hourly time frame is bearish. Yesterday the price reached the priority change level, but the sellers showed initiative and protected the level. The MACD indicator became negative. Now the price has reached the support level, so a technical rebound is possible. Under such market conditions, buy trades can be considered from the support level of 1.0974 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 1.1072 or 1.1102 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: 1.2937
• Prev. Close: 1.27471.2783
• % chg. over the last day: -1.20%

The dollar strengthened against the British currency on Thursday after better-than-expected US economic data continued to dampen investor expectations for a relatively loose monetary policy from the Federal Reserve. A string of strong data shows that the US will avoid recession for the time being, increasing the likelihood that the Fed may raise interest rates further. However, the upside potential for GBP remains due to the fact that the Bank of England plans to hold two more rate hikes, which will reduce the rate differential between central banks.

Trading recommendations

• Support levels: 1.2741,1.2646
• Resistance levels: 1.2818,1.2857,1.2914,1.3011,1.3072,1.3140,1.3308

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price made an attempt to change the priority yesterday but sharply reversed from the resistance level at 1.2963, forming a false breakout zone. The MACD indicator is in the negative zone with no signs of reversal. The most optimal level for buying is 1.2741 but with confirmation on the lower time frames. Sell trades are best considered from the resistance level of 1.2818 or 1.2857 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: 140.19
• Prev. Close: 139.44
• % chg. over the last day: -0.53%

Yesterday at the end of the trading day, the Japanese yen strengthened sharply amid rumors that the Bank of Japan may consider abolishing the YCC yield curve. At its meeting on Friday, the BOJ kept interest rates ultra-low and said that while it will continue operations to control the YCC yield curve, it will take a less stringent approach to keeping yields within the target range. The move marks the first potential shift in the ultra-low stance towards normalization. That said, the bank will still maintain its easing policy to boost wage growth and bring inflation closer to its 2% annual target range. Also, keep in mind that the interest rate differential between BoJ and FED is still not shrinking, so don’t count on a full trend reversal on USD/JPY.

Trading recommendations

• Support levels: 137.78,137.25,136.56
• Resistance levels: 139.60,140.87,140.70,142.61,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bearish. The Japanese yen is strengthening on the background of the first steps of the Bank of Japan towards normalization of the monetary policy. The price is trading below the moving averages. The MACD indicator is in the negative zone, and there is selling pressure. The most suitable level for buying will be 137.78 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the resistance level of 139.60 or 140.87 but with confirmation in the form of a false breakout.

Alternative scenario:

if the price fixes above the 141.31 resistance level, with a high probability, the uptrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3207
• Prev. Close: 1.3223
• % chg. over the last day: +0.12%

On Thursday, the dollar index rose sharply against major currencies. A falling euro amid a more dovish tone from the ECB combined with strong US GDP and US labor market data boosted the dollar. On the other hand, oil prices are also rising, which is positive for the Canadian dollar. Yesterday, the price of Brent crude exceeded $84 per barrel for the first time since April, helped by a supply shortage following OPEC+ production cuts and a renewed bullish outlook for Chinese demand and global growth.

Trading recommendations

• Support levels: 1.3199,1.3167,1.3153,1.3131,1.3108
• Resistance levels: 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, but it is close to change. Now the price is forming a wide-volatile price corridor and has approached the level of priority change, which is the upper boundary of the corridor. The probability of an upward breakout is increasing. The MACD indicator has become positive, and there is buying pressure inside the day. It is better to buy from the support level of 1.3199 or 1.3167 but with confirmation on the lower time frames. Sell trades are best sought from the resistance level of 1.3243 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.