The Analytical Overview of the Main Currency Pairs on 2022.05.16

The EUR/USD currency pair

• Prev Open: 1.0375
• Prev Close: 1.0406
• % chg. over the last day: +0.30%

Consumer price index in France increased by 0.4% in April (after +1.4% in March). On an annualised basis the inflation rate reached 4.8%. The annual consumer price index in Spain declined from 8.4% to 8.3%. EU industrial production fell by 1.8% in March 2022. With the war in Ukraine and sanctions on Russian goods and energy, the European economy is starting to show signs of slowing down. More ECB officials are leaning toward raising interest rates at the July meeting.

• Support levels: 1.0379, 1.0342
• Resistance levels: 1.0484, 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 MACD indicator has become inactive, and the sellers’ pressure is decreasing. Under such market conditions, traders can look for sell deals from the resistance level of 1.0484, but only after the additional confirmation. Buy trades can be considered on intraday timeframes from the support level of 1.0379, but only with short targets and confirmation.

Alternative scenario: if the price breaks out through the 1.0588 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone EU Economic Forecasts (m/m) at 12:00 (GMT+3);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+3);
• – US FOMC Member Williams Speaks at 15:55 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2194
• Prev Close: 1.2262
• % chg. over the last day: +0.56%

Great Britain will update its inflation data this week. Analysts are predicting that the country’s annual inflation rate will jump to 9.1% (current value – 7.0%). Therefore, today’s monetary policy report from the Bank of England should be closely watched by traders for hints of more aggressive monetary policy tightening.

• Support levels: 1.2199, 1.2127
• Resistance levels: 1.2265, 1.2265, 1.2450, 1.2519, 1.2602, 1.2695, 1.2792, 1.2981

On the hourly time frame, the GBP/USD currency pair trend is still bearish. The MACD indicator became positive and there is a slight buying pressure. Under such market conditions, sell trades should be considered from the resistance level of 1.2265 intraday. For buy deals, traders may focus on the level of 1.2199, but only with additional confirmation in the form of a buyers’ initiative.

Alternative scenario: if the price breaks down through the 1.2450 resistance level and fixes above, the mid-term uptrend will likely be resumed.

• – UK Monetary Policy Report Hearings at 17:15 (GMT+3).

The USD/JPY currency pair

• Prev Open: 128.32
• Prev Close: 129.24
• % chg. over the last day: +0.72%

Japan will update its inflation data later this week. Analysts are predicting that consumer prices will reach 2% in annual terms. This is the key inflation rate that the Bank of Japan is aiming for with its soft monetary policy. So if the data will be in the 2% range, the Bank of Japan may start to normalize monetary policy in the near future. And as the future scenario is priced in, the uptrend in the USD/JPY currency pair is close to end.

• Support levels: 128.63, 127.29, 126.91, 126.00, 125.57
• Resistance levels: 129.31, 130.12, 130.99

The medium-term trend on the USD/JPY currency has changed to bearish. The price has confidently broken through the priority change level and has consolidated below the moving averages. Despite the change in the trend on the hour timeframe, it is better to look for buy deals with the expectation of an uptrend continuation, since the Japanese Yen has no fundamental support. First of all, it is worth considering the support level of 128.63, but with confirmation. A resistance level of 129.31 may be considered for sell deals, but only with additional confirmation.

Alternative scenario: If the price fixes above 130.99, the uptrend will likely be resumed.

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3040
• Prev Close: 1.2903
• % chg. over the last day: -1.62%

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 on Friday, which has led to a strengthening of the Canadian dollar. The fundamental picture for the USD/CAD currency pair looks like both the dollar index and the Canadian dollar have support from the central banks, so traders should not expect any mid-term or long-term trends here.

• Support levels: 1.2918, 1.2838, 1.2908, 1.2774, 1.2692, 1.2644, 1.2607, 1.2521
• Resistance levels: 1.3000, 1.3052

The USD/CAD currency pair is bullish in terms of technical analysis. The price pullback to the moving averages. The MACD indicator became negative, but the buyer’s pressure is still here. 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 1.2918, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3000, 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.