The Analytical Overview of the Main Currency Pairs on 2023.08.01

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1015
• Prev. Close: 1.0996
• % chg. over the last day: -0.17

The inflation rate in the Eurozone decreased from 5.5% to 5.3% in annualized terms. Meanwhile, core inflation (excluding food and energy prices) showed resilience again and remained at 5.5% y/y. This is a hawkish signal for the ECB, as core consumer prices are a key factor in analyzing inflation figures. ECB President Christine Lagarde reiterated yesterday that the ECB could still raise rates in the future if needed, calling GDP data from Spain, France, and Germany “encouraging.” This is a green flag for the Euro, as further policy tightening from the ECB will reduce the interest rate differential with the US Fed.

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. The price reached the daily support level, from which the buyers took the initiative, and a false breakdown zone was formed. The MACD indicator is in the negative zone, but the selling pressure is weak. 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: 1.2841
• Prev. Close: 1.27471.2833
• % chg. over the last day: -0.06%

Economists estimate a roughly 68% probability that the Bank of England will raise the rate on Thursday by 25 basis points, and only 32% believe in a 50 bps move. With the US Fed likely not to raise interest rates at its next meeting, the rate differential between the Bank of England and the US Fed will narrow, which will be favorable for GBP/USD quotes in the coming weeks.

Trading recommendations

• Support levels: 1.2804,1.2741,1.2646
• Resistance levels: 1.2880,1.2913,1.2962,1.3011,1.3072,1.3140,1.3308

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 zone. The MACD indicator became inactive. The most optimal level for buying is 1.2804 but with confirmation on the lower time frames. Sell trades are best considered from the resistance level of 1.2913 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: 140.95
• Prev. Close: 142.26
• % chg. over the last day: +0.93%

On Monday, the Bank of Japan gave another surprise by announcing an unscheduled bond-buying operation to lower rates, which contrasts with recent policymakers’ statements to manage the yield curve more flexibly. The bond purchases were a reminder that the Bank of Japan would not be in a hurry to abandon its loose monetary stimulus policy. This is a negative factor for the Japanese yen.

Trading recommendations

• Support levels: 141.58,140.98,139.56,138.07,137.78,137.25,136.56
• Resistance levels: 142.68,142.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone with signs of overbought, as well as with signs of divergence. There is a high probability of a corrective downward movement. The most suitable level for buying is 141.58 or 140.98 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the resistance level of 142.68 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: 1.3234
• Prev. Close: 1.3187
• % chg. over the last day: -0.35%

The Canadian dollar strengthened sharply yesterday against the US dollar, while the dollar itself showed no signs of weakness. Most likely, this is a delayed reaction of Canada to the prolonged rise in oil prices. Banks and rating agencies are upgrading the ratings of major oil companies due to the forecast of big earnings for the 2nd quarter due to rising oil prices. OPEC+ meeting will be held at the end of the week, where it is expected to maintain production quotas, which given the high demand in the summer, will not be enough to cover the deficit. According to analysts’ estimates, in the near term, oil prices may rise to the range of 90-100 dollars per barrel.

Trading recommendations

• Support levels: 1.3153,1.3131,1.3108
• Resistance levels: 1.3224,1.3243,1.3329,1.3383,1.3426

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price failed to consolidate above the priority change level and returned to the wide-volatility corridor. The MACD indicator again shows the buyers’ pressure. It is better to buy from the support level of 1.3153 after a false breakdown. Sell trades are best sought from the resistance level of 1.3224 or 1.3243, subject to a reverse reaction.

Alternative scenario:

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