The EUR/USD currency pair

• Prev Open: 1.0943
• Prev Close: 1.0948
• % chg. over the last day: +0.04%

There is a 100% chance that the US Federal Reserve will raise interest rates by at least 25 basis points today. Analysts are confident that the rate will rise at every Federal Reserve meeting until the end of the year. But with inflation approaching 8%, many believe that rising rates to 2% by the end of the year will not be enough to dampen consumer price growth, so the Fed needs to start cutting the balance sheet. Either way, an interest rate hike is a positive signal for strengthening the national currency.

• Support levels: 1.0948, 1.0916, 1.0887, 1.0823, 1.0633
• Resistance levels: 1.1051, 1.1112, 1.1291

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is now trading in the price corridor near the moving averages. The MACD indicator has become inactive. Under such market conditions, it is best to look for sell trades on intraday time frames from the resistance level of 1.1051. Buy trades should be considered from the support level 1.0916, but only with short targets.

Alternative scenario: if the price breaks out through the 1.1112 resistance level and fixes above, the mid-term uptrend will likely resume.

• – US Retail Sales (m/m) at 14:30 (GMT+2);
• – US FOMC Meeting Minutes at 20:00 (GMT+2);
• – US Fed Interest Rate Decision at 20:00 (GMT+2);
• – US FOMC Press Conference at 20:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3002
• Prev Close: 1.3035
• % chg. over the last day: +0.25%

The ZEW economic sentiment indicator for the Eurozone showed the biggest drop since the study began in 1991. This indicates a high probability that Europe will face stagflation (a slowdown in economic growth with high inflation). The war in Ukraine has significantly worsened Europe’s economic outlook, which affects the UK economy, where the income of international companies and corporations is expected to fall in the next quarter. At the same time, the debt market continues to point to the decline of the British currency.

• Support levels: 1.2989, 1.2863
• Resistance levels: 1.3111, 1.3164, 1.3274

On the hourly time frame, the trend on the GBP/USD currency pair is bearish. Volatility is decreasing, buying pressure is increasing. The MACD indicator has become inactive, but there is a divergence towards long positions on higher time frames. Under such market conditions, it is better to look for buy deals from the support level 1.2989, but it is better with confirmation. For sell deals, it is better to consider the resistance level of 1.3111.

Alternative scenario: if the price breaks out through the 1.3164 resistance level and fixes above, the mid-term uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 118.19
• Prev Close: 118.29
• % chg. over the last day: +0.08%

An interest rate hike by the Fed is a positive sign for the strength of the dollar index. At the same time, the central bank of Japan adheres to an ultra-soft monetary policy, which negatively affects the Japanese yen. Therefore, USD/JPY quotes will continue to grow in the medium term.

• Support levels: 117.69, 117.34, 116.95, 116.32
• Resistance levels: 118.42, 118.64

The medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator is in the positive zone. There are signs of overbought and divergence, which means that a corrective move down is close. Under such market conditions, it is best to look for buy deals after a small pullback, as the price has strongly deviated from the moving averages. A support level of 117.69 or 117.34 would be best, but with additional confirmation. For sell deals, the resistance level of 118.32 can be considered, but it is better to wait for a false breakout of the level.

Alternative scenario: if the price fixes below 116.32, the uptrend will likely be broken.

• – Japan Industrial Production (m/m) at 06:30 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.2819
• Prev Close: 1.2765
• % chg. over the last day: -0.42%

The Canadian dollar is a commodity currency, so it is highly dependent not only on the monetary policy of the Bank of Canada but also on the behavior of oil prices and the dollar index. Today, the inflation data will be published in Canada. Analysts expect the inflation rate to remain the same. However, if it turns out to be higher than expected, this may lead to a sharp strengthening of the Canadian currency on expectations of tighter monetary policy. Moreover, oil prices found a support level and stabilized.

• Support levels: 1.2725, 1.2653, 1.2555, 1.2517
• Resistance levels: 1.2776, 1.2851

In terms of technical analysis, the USD/CAD currency pair trend is bullish. The MACD indicator became negative, but the sellers’ pressure increased. It is worth trading only with short targets because fundamentally, there are no preconditions for a medium-term trend. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2747, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2776 or 1.2851.

Alternative scenario: if the price breaks through and consolidates below 1.2747, the downtrend will likely resume.

• – Canada Consumer Price Index (m/m) at 14:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 16:30 (GMT+2);