The Analytical Overview of the Main Currency Pairs on 2023.08.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0936
• Prev. Close: 1.0948
• % chg. over the last day: +0.11

The monthly report on the labor market Nonfarm Payrolls will be published in the United States today. Economists forecast that the US economy will add 203k jobs in July. The unemployment rate is expected to be 3.6% (currently 3.7%), and average hourly earnings are expected to remain at the same value. With the Fed still undecided on whether to raise rates again, incoming data could play in the dollar’s favor if it comes in stronger than expected. But recent data on job openings and weekly jobless claims showed the first signs of a cooling labor market. Therefore, there is a possibility that the NFP report will fall short of expectations.

Trading recommendations

• Support levels: 1.0926,1.0866
• Resistance levels: 1.0975,1.1046,1.1102,1.1198,1.1227

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading near the daily support level. The MACD indicator has become positive, but the selling pressure is weak, with a divergence formed on several time frames. There is a possibility of a deeper upward correction. Under such market conditions, buy trades can be considered from the support level of 1.0926, but with confirmation, as the level has already been tested. Sell trades can be considered from the resistance level of 1.0975 or 1.1046 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.1046 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2708
• Prev. Close: 1.27471.2707
• % chg. over the last day: -0.01%

The Bank of England (BoE) decided to raise interest rates by 25 bps in line with consensus, although the likelihood of a 50 bps hike rose sharply before the meeting. The index of business activity (PMI) in the services sector was unchanged from the previous month. Throughout the trading week, the British pound declined due to a decrease in investor appetite for risk and the desire for a “safe haven” – the US dollar. But the interest rate differential between the US Federal Reserve and the Bank of England has decreased, so the British pound has room to strengthen against the dollar, especially if today’s data on the US labor market will disappoint.

Trading recommendations

• Support levels: 1.2680,1.2649
• Resistance levels: 1.2762,1.2804,1.2880,1.2913,1.2942,1.3011,1.3072

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. Yesterday, buyers showed the initiative from the support level of 1.2649. The MACD indicator became positive, and the correction started. The most optimal level for buying is 1.2680 but with confirmation on the lower time frames. Sell trades are best considered from the resistance level of 1.2762 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2804 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 143.32
• Prev. Close: 142.51
• % chg. over the last day: -0.56%

The strength or weakness of the upcoming NFP labor market report will play a crucial role in determining the trajectory of the US Dollar, shaping the outlook for USD/JPY as well. If the NFP data comes in above forecasts, it will be a strengthening factor for the dollar index, leading to further upside for USD/JPY. But if the labor market data disappoint economists, the dollar index will lose support, which will lead to a corrective movement on the USD/JPY currency pair.

Trading recommendations

• Support levels: 142.06,140.97,140.71,139.57
• Resistance levels: 143.54,143.32,145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading at the level of moving averages and is forming a flat accumulation. The MACD indicator has become negative, and there is a slight selling pressure inside the day. The most suitable level for buying would be 142.06 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 143.32 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price fixes below the 138.86 support level, with a high probability that the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3337
• Prev. Close: 1.3352
• % chg. over the last day: +0.11%

Saudi Arabia said yesterday it would extend its voluntary one million BPD oil production cut for a third month, including September, adding that the cut could be extended or increased. This helped push the oil price up 2% yesterday, which in turn strengthened the Canadian dollar. OPEC+ countries will meet today to determine the next production quotas. The growth of oil is usually accompanied by the strengthening of the Canadian currency and vice versa.

Trading recommendations

• Support levels: 1.3281,1.3224,1.3199,1.3150,1.3131
• Resistance levels: 1.3357,1.3386,1.3426

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading above the moving averages but has reached the daily resistance level. Now a flat accumulation is being formed in anticipation of the news. The MACD indicator is showing signs of corrective movement. Buy trades are best to look for after a pullback to the support level of 1.3281. Sell trades are better to consider from the resistance level of 1.3357 or 1.3386, subject to confirmation on the lower time frames.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1.3199, the downtrend will resume with a high probability.