The Analytical Overview of the Main Currency Pairs on 2023.08.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0977
• Prev. Close: 1.0946
• % chg. over the last day: -0.28%

The euro showed weak resilience last week, eventually ending the week with a decline. Last week, an unexpected tax on Italian bank profits was announced on Tuesday, sending the euro lower. Prices recovered the following day slightly after assurances from Italy’s president that the tax would amount to no more than 0.1% of banks’ total assets. Next, rising inflation in the US scared investors, leading to a dollar rise. As a result, the euro fell further towards the end of the trading week. This week, a lot of important Eurozone data will be released, ranging from industrial production and trade balance to GDP and inflation data.

Trading recommendations

• Support levels: 1.0928,1.0911,1.0866
• Resistance levels: 1.0983,1.1009,1.1026,1.1046,1.1102,1.1198,1.1227

The trend on the EUR/USD currency pair on the hourly timeframe is bearish. The price is again trading below the moving averages. The MACD indicator is in the negative zone with no signs of reversal. Under such market conditions, buy trades can be considered from the support level of 1.0928 or 1.0911, but with confirmation in the form of a false breakdown and structure change on the lower timeframes, as the levels have already been tested. Sell trades can be considered from the resistance level of 1.0983 but with confirmation in the form of sellers’ reaction.

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: 1.2673
• Prev. Close: 1.27471.2692
• % chg. over the last day: +0.15%

UK GDP continues to show resilience in 2023 ahead of this week’s inflation data release. The UK economy grew by 0.5% last month, with the second quarter figure of 0.2%. Industrial production data also pleased. Production grew by 1.8% in July, and business investment rose by 3.4%. Overall, the data is positive for the British currency. Given that the Bank of England intends to raise the interest rate by 0.25% at least twice, the British pound has good prospects for growth in the coming weeks.

Trading recommendations

• Support levels: 1.2665,1.2649
• Resistance levels: 1.2750,1.2804,1.2880,1.2913,1.2942,1.3011,1.3072

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages. In a broader perspective, a wide volatile flat is forming, and now the price is on the lower boundary of this accumulation. The MACD indicator has become negative, but the sellers’ pressure is weak, and divergence is present. Buy deals can be considered from the support level of 1.2665 but with additional confirmation on the lower timeframes in the form of a structure change. Sell trades are best considered from the resistance level of 1.2750 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 be renewed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 144.68
• Prev. Close: 144.95
• % chg. over the last day: +0.19%

The US dollar again showed positive dynamics last week, largely due to the hawkish stance of the Federal Reserve policymakers and some decline in risk sentiment at the end of the summer. The dollar also benefited from renewed safe-haven demand as market participants remain concerned about the uneven Chinese economic recovery. Friday’s producer price index (PPI) data came in slightly higher at 0.3% in July, up from the previously revised 0% reading. This is another reason why the dollar held onto its high ground at the end of the week. There are no factors for the Japanese yen to strengthen now, so the growth of the dollar contributes to the growth of USD/JPY quotes. However, the Japanese government can intervene at any moment to support the rate. Last time the growth of quotations above 145 yen per dollar led to currency interventions.

Trading recommendations

• Support levels: 143.72,143.26,142.64,140.98,140.71,139.57
• Resistance levels: 145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price has reached the psychological resistance level of 145.00 The MACD indicator is in the positive zone, but the divergence is observed on several timeframes. The most suitable level for buying will be 143.72, but with confirmation in the form of buyers’ initiative on the lower timeframes. Sell trades can be considered from the resistance level of 145.00 but with confirmation in the form of sellers’ initiative and change of trend structure.

Alternative scenario:

if the price fixes below the 143.25 support level, with a high probability, that the downtrend will be renewed.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3437
• Prev. Close: 1.3444
• % chg. over the last day: +0.05%

Last three trading days USD/CAD quotes were trading in a range without any dynamics. On the one hand, the US dollar showed positive dynamics throughout the last week. On the other hand, due to forecasts of record global oil demand this month, along with supply cuts, oil prices rose for the seventh consecutive week. The Canadian dollar is a commodity-based currency, so it was supported by rising oil prices. Looking ahead, analysts expect the dollar index to decline closer to winter as the US Federal Reserve gets as close to peak interest rates as possible. But oil prices will continue to rise according to forecasts. Therefore, the Canadian dollar may significantly strengthen against the dollar by the end of the year.

Trading recommendations

• Support levels: 1.3449,1.3412,1.3342,1.3319,1.3281,1.3263,1.3224,1.3199
• 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 in a corridor with slight upward pressure. The MACD indicator is in the positive zone, but the buying pressure is weak. It is better to buy after a pullback to the support level of 1.3449 or, in case of a deeper correction – to 1.3412. Sell trades are better to look for from the resistance level of 1.3500 or after a breakdown of the 1.3412 support level, which will open the way to the 1.3342 support level.

Alternative scenario:

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