The Analytical Overview of the Main Currency Pairs on 2023.08.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0949
• Prev. Close: 1.0972
• % chg. over the last day: +0.21

Consumer Price Index data will be released in the US today. The annualized inflation rate is expected to rise slightly from 3.0% to 3.3%, with core inflation (excluding food and energy prices) falling from 4.8% to 4.7%. Core inflation and services inflation will be the main focus of economists. If these key indicators show a slowdown, it will increase the likelihood that the US central bank will end its tightening cycle this fall. This will be a negative factor for the USD, while for risk assets (GBP, EUR), it will be a growth factor.

Trading recommendations

• Support levels: 1.0964,1.0926,1.0866
• Resistance levels: 1.1026,1.1046,1.1102,1.1198,1.1227

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading at the levels of moving averages. The MACD indicator has become inactive, and market volatility has decreased in anticipation of CPI news. Under these market conditions, buy trades can be considered from the support level of 1.0964 or 1.0926, but with confirmation in the form of buyers’ reactions. Sell trades can be considered from the 1.1026 resistance level but with confirmation in the form of a false breakout.

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: 1.2743
• Prev. Close: 1.27471.2717
• % chg. over the last day: -0.20%

Investment analysts expect the UK interest rates to remain high for a longer period of time than previously estimated. There is an 85% chance that the Bank of England will raise interest rates next month. The Bank of England is still in the difficult position of trying to control inflation, which is still very high at 7.9%. The Bank of England is nearing the ceiling with only one or two rate rises left as it needs to wait for the effects of previous rate rises to fully play out in the economy. This makes the key release for sterling this week, the GDP data on Friday, particularly important.

Trading recommendations

• Support levels: 1.2676,1.2649
• Resistance levels: 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. The price is forming a wide-volatile corridor. The MACD indicator has become inactive. The most optimal level for buying is 1.2676 but with confirmation on the lower time frames. Sell trades are best considered from the resistance level of 1.2804 but with confirmation in the form of a false breakout and 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: 143.36
• Prev. Close: 143.71
• % chg. over the last day: +0.24%

In Japan, the Producer Price Index decreased from 4.3% to 3.6% in annualized terms. This index reflects the nature of inflation between factories and businesses and is a leading indicator of consumer inflation. The decline in inflation is a negative sign for the Bank of Japan, which is trying its best to make inflation sustainable to move away from deflationary policies. As long as inflationary pressure in Japan is declining, it is too early to talk about the normalization of monetary policy. This is a negative factor for the Japanese yen.

Trading recommendations

• Support levels: 143.46,142.46,140.98,140.71,139.57
• Resistance levels: 145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The bullish trend continues, and the pressure of buyers is growing again. The MACD indicator is in the positive zone, but there are the first signs of divergence. The most suitable level for buying is 143.46 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades can be considered from the resistance level of 145.00 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price fixes below the 140.70 support level, with a high probability that the downtrend will resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3416
• Prev. Close: 1.3415
• % chg. over the last day: -0.01%

The Canadian dollar got some support yesterday due to the rally in oil prices. But otherwise, the Canadian dollar has no factors to strengthen now, as the Bank of Canada is unlikely to raise interest rates further as the economy has deteriorated sharply in recent months. So as long as oil prices are rising, the Canadian dollar is resilient. But as soon as oil starts to decline, USD/CAD quotes will rush upwards.

Trading recommendations

• Support levels: 1.3392,1.3342,1.3319,1.3281,1.3263,1.3224,1.3199
• Resistance levels: 1.3500

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of moving averages. The MACD indicator has become inactive. Volatility has decreased on the eve of the news. It is better to buy after a pullback to the support level of 1.3392 or, in case of a deeper correction – to 1.3341. Sell trades are best sought from the resistance level of 1.3500, subject to a false breakout, as the level has already been tested.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1.3319, the downtrend will resume with a high probability.