The Analytical Overview of the Main Currency Pairs on 2022.05.12

The EUR/USD currency pair

• Prev Open: 1.0524
• Prev Close: 1.0513
• % chg. over the last day: -0.10%

According to Executive Board member Isabelle Schnabel, the European Central Bank must respond to inflation, even if the factors pushing it to record levels are global in nature. The politician also added that global factors, which are largely driving inflation, do not mean that monetary policy can or should remain on the sidelines. Hence, it is necessary to act decisively now rather than act more later. At the moment, The ECB has maintained a soft stimulative monetary policy, which negatively affects the euro.

• Support levels: 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 is trading in a wide price corridor, and the MACD indicator has become inactive. 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 1.0646 resistance level and fixes above, the uptrend will likely resume.

• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US FOMC Member Daly Speaks at 22:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2314
• Prev Close: 1.2246
• % chg. over the last day: -0.55%

The British pound continues to lose ground against the dollar and the euro, although the Bank of England has already raised interest rates three times, and the ECB will only raise the rate in the second half of the year. Analysts believe that the Bank of England failed to forecast and completely misinterpreted the reasons for inflation. At the same time, Central Bank representatives do not make any statements. UK GDP declined by 0.1% last month, with industrial and manufacturing also showing a decline of 0.2%. The UK is slowly moving towards stagflation (a slowdown in economic growth with high inflation).

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

On the hourly time frame, the GBP/USD currency pair trend is still bearish. The price continues to decline, but the MACD indicator shows signs of divergence. Under such market conditions, sell trades should be looked for from the resistance level of 1.2276 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 1.2519 resistance level and fixes above, the mid-term uptrend will likely be resumed.

• – UK GDP (m/m, q/q) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 130.43
• Prev Close: 129.96
• % chg. over the last day: -0.36%

From a fundamental point of view, there is no change. The Bank of Japan’s prolonged stimulus program is increasingly being 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 maintain 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: 130.12, 130.99

The medium-term trend on the USD/JPY currency pair is still bullish. Volatility has increased, with the price continuing to trade in a wide sideways. 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 130.12 or 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: 1.3021
• Prev Close: 1.2992
• % chg. over the last day: -0.22%

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 jumped by 5% on Wednesday after Russia imposed sanctions on 31 companies that imposed sanctions on Moscow after the invasion of Ukraine. That gave momentum to the Canadian dollar, but after US CPI news was released, the rise in the dollar index offset the strengthening of the Canadian dollar.

• Support levels: 1.2954, 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 has become inactive. 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 1.2954, 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 1.2838, the downtrend will likely be resumed.