The Analytical Overview of the Main Currency Pairs on 2022.05.11

The EUR/USD currency pair

• Prev Open: 1.0553
• Prev Close: 1.0529
• % chg. over the last day: -0.23%

Today, investors and traders will closely monitor the April US Consumer Price Index for any signs that inflation may begin to cool off. Analysts expect annual inflation to fall to 8.1% (current level – 8.5%). Investors’ attention will also be focused on the inflation level in Germany, where analysts expect to see prices rise by 0.8%.

• Support levels: 1.0535, 1.0453
• Resistance levels: 1.0588, 1.0646, 1.0723, 1.0766, 1.0799, 1.0869, 1.0955

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is still bearish. The price forms a wide price corridor, the MACD indicator has become inactive, and volatility is reduced in anticipation of inflation data. Such narrowing of liquidity usually leads to sharp impulse movements. Under such market conditions, traders can look for sell deals from the resistance level of 1.0646, but only after the additional confirmation. Buy trades can be considered on intraday timeframes from the support level of 1.0453, but only with short targets and confirmation.

Alternative scenario: if the price breaks out through the 1.0723 resistance level and fixes above, the uptrend will likely resume.

• – US FOMC Member Bostic Speaks at 02:00 (GMT+3);
• – German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 11:00 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2329
• Prev Close: 1.2315
• % chg. over the last day: -0.11%

The British pound has lost ground against the euro, where the ECB has not yet raised interest rates. This means that the Bank of England is losing control, as the Bank of England has already raised interest rates three times, while the ECB will raise rates only in the second half of the year. Bank of England spokesman Michael Saunders said yesterday that UK inflation is expected to peak at 9% annually. Analysts believe that the Bank of England failed in its forecasting and completely misinterpreted the causes of high inflation.

• Support levels: 1.2276, 1.2127
• Resistance levels: 1.2450, 1.2519, 1.2602, 1.2695, 1.2792, 1.2981, 1.3010, 1.3114

On the hourly time frame, the GBP/USD currency pair trend is still bearish. The price forms a wide price corridor, the MACD indicator has become inactive, and trading activity has decreased. Such liquidity narrowing, as a rule, leads to sharp impulse movements. Under such market conditions, sell trades should be looked for from the resistance level of 1.2450 or 1.2519 intraday. For buy deals, traders may consider the level of 1.2127 if the price continues to decrease after the inflation data.

Alternative scenario: if the price breaks down through the 1.2695 resistance level and fixes above, the mid-term uptrend will likely be resumed.

The USD/JPY currency pair

• Prev Open: 130.24
• Prev Close: 130.43
• % chg. over the last day: +0.15%

The Bank of Japan’s prolonged stimulus program has been increasingly criticized for fueling an unwanted yen drop. Investors are paying attention to the widening gap between ultra-low interest rates in Japan and rising rates in other major economies. The Bank of Japan’s ultra-soft policy allows the government to support huge spending despite Japan’s growing national debt. But the country’s inflation rate is already approaching the 2% target, so analysts believe that the soft monetary policy is close to ending.

• Support levels: 129.42, 128.55, 127.29, 126.91, 126.00, 125.57
• Resistance levels: 130.99

The medium-term trend on the USD/JPY currency pair is still bullish. The price is forming a wide price corridor, and the MACD indicator has become inactive. With a high probability, the situation will not change before the inflation data. Under such market conditions, it is best to look for buy deals, expecting the continuation of the uptrend. First of all, it is worth considering the support level of 129.42. A resistance level of 130.99 may be considered for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 128.55, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.3012
• Prev Close: 1.3028
• % chg. over the last day: +0.12%

The Canadian dollar is a commodity currency and is highly dependent not only on the monetary policy of the Bank of Canada but also on the dynamics of the dollar index and oil prices. Oil prices continue to fall as tighter quarantine measures in Shanghai continue to raise demand concerns. This is negatively affecting the Canadian dollar.

• Support levels: 1.2992, 1.2838, 1.2908, 1.2774, 1.2692, 1.2644, 1.2607, 1.2521
• Resistance levels: 1.3044

The USD/CAD currency pair is bullish in terms of technical analysis. The price has reached the daily resistance level. The MACD indicator is in the positive zone, but the divergence of higher time frames is increasing. Trade is worth it only with short targets because, fundamentally, both the dollar index and the Canadian dollar are inclined to grow. Under such market conditions, it is better to look for buy trades on the lower timeframes from the support level of 1.2992, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3044, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below 1.2693, the downtrend will likely be resumed.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).