The Analytical Overview of the Main Currency Pairs on 2023.07.31

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0975
• Prev. Close: 1.1014
• % chg. over the last day: +0.36

A day after the ECB voted to raise interest rates by 25 basis points, representatives of the Governing Council are already talking about the September meeting. The governor of the Bank of Greece said he sees no possibility of another rate hike, but if the committee does vote in favor of an increase, it will be the last. Another ECB representative, the governor of the Bank of Lithuania, hinted that the ECB is close to or may have already peaked rates. At the same time, the governor of the Central Bank of Slovenia sees the possibility of another increase or pause. Thus, the hawkish notes that previously supported the Euro seem to be fading. Inflation data will be released today in the Eurozone, where a slight decline in inflation is expected, which will only increase the probability in favor of a pause at the September ECB meeting.

Trading recommendations

• Support levels: 1.0984,1.0967,1.0925,1.0866
• 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. But the price has reached the daily support level, from which the buyers took the initiative, with the formation of a false breakdown zone. The MACD indicator is inactive. Under such market conditions, buy trades can be considered from the support level of 1.0984 or 1.0967, 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: 1.2792
• Prev. Close: 1.27471.2846
• % chg. over the last day: +0.42%

The recent decline in UK inflation has given the Bank of England some room for maneuver and more time to see the cumulative effect of the rate hikes already made. This week on Thursday, the Bank of England (BoE) will announce its monetary policy decision. The market expects the Bank of England to raise the bank rate by 0.25% to 5.25%, but there is also the possibility of a 0.5% move. Amid expectations of such an aggressive move, the British pound may get fundamental support this week.

Trading recommendations

• Support levels: 1.2803,1.2741,1.2646
• Resistance levels: 1.2879,1.2914,1.2962,1.3011,1.3072,1.3140,1.3308

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. On Friday, the price made a false breakdown of the daily support level, after which the price returned on impulse, forming a false breakdown area. The MACD indicator became inactive. The most optimal level for buying is 1.2803 but with confirmation on the lower time frames. Sell trades are best considered from the resistance level of 1.2914 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2962 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 139.41
• Prev. Close: 141.15
• % chg. over the last day: +1.25%

Although the Japanese Central Bank adjusted the Yield Curve Control (YCC), the BOJ lowered its long-term inflation forecasts, thus keeping the possibility for further easing. This is what caused the Japanese yen to fall so precipitously against the US Dollar on Friday, wiping out almost all the yen’s gains during the week. What’s next? The interest rate differential between the US Fed and the Bank of Japan is not in favor of the latter. And since the US Fed will keep rates at a record level until at least the first quarter of 2024, there is no need to talk about the medium-term strengthening of the yen against the dollar.

Trading recommendations

• Support levels: 140.98,139.56,138.07,137.78,137.25,136.56
• Resistance levels: 141.95,142.61,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to a bullish one. The price is trading above the moving averages. The MACD indicator is in the positive zone with no signs of reversal. The most suitable level for buying would be 140.98 or 139.56 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the resistance level of 141.95 or 142.61 but with confirmation in the form of a false breakout.

Alternative scenario:

if the price fixes below the 138.07 support level, with a high probability the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3221
• Prev. Close: 1.3252
• % chg. over the last day: +0.23%

Canada’s GDP grew by 0.3% in May. Economic growth accelerated after the end of one of the largest strikes in Canadian history, but preliminary estimates suggest that weakness in wholesale trade and manufacturing will lead to a small contraction in GDP in June. The preliminary estimate of a decline in June gross domestic product may somewhat reassure Canada’s Central Bank, which continues to look for signs of inflation sustainability for further rate hikes. This is a negative factor for the Canadian dollar, and even rising oil prices cannot offset this weakness in the Canadian.

Trading recommendations

• Support levels: 1.3192,1.3167,1.3153,1.3131,1.3108
• 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 the price is trading at the priority change level, which is the upper boundary of the corridor. The probability of an upward breakout is increasing. The MACD indicator shows buying pressure, but there are the first signs of divergence. Buying is best sought from the support level of 1.3192 or from 1.3243 after a true breakout. Sell trades are best sought from the resistance level of 1.3243 if the price shows an impulse return below the level and forms a false breakout zone.

Alternative scenario:

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