The Analytical Overview of the Main Currency Pairs on 2022.05.17

The EUR/USD currency pair

• Prev Open: 1.0406
• Prev Close: 1.0434
• % chg. over the last day: +0.27%

More and more ECB representatives are inclined to raise the interest rate at the July meeting. At the same time, analysts are predicting that the ECB is likely to decide to end its stimulus program at its next meeting. The European currency has already started to strengthen a bit by this scenario, but it should be noted that by the summer the interest rate will be about 0.25% in Europe, while the US rate will be around 2%. This disbalance will cause EUR/USD quotes to decline in the mid-term.

• 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 of the EUR/USD currency pair on the hourly time frame is still bearish. The MACD indicator became positive, the buyers began to show initiative, but it is weak. 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 Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone GDP (q/q) at 12:00 (GMT+3);
• – US FOMC Member Bullard Speaks at 15:00 (GMT+3);
• – US Retail Sales (m/m) at 15:30 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 20:00 (GMT+3);
• – US Fed Chair Powell Speaks at 21:00 (GMT+3);
• – US FOMC Member Mester Speaks at 21:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2240
• Prev Close: 1.2319
• % chg. over the last day: +0.64%

The Governor of the Bank of England warned yesterday that “apocalyptic” food and energy prices are coming in Britain. The Bank of England said inflation is likely to peak at 10.25% in the last quarter of 2022. This will affect domestic demand and reduce activity and is likely to lead to an increase in unemployment. Also, Bailey added that raising the Bank of England’s interest rate is not enough to keep inflation within the target range. Michael Saunders of the Bank’s Monetary Policy Committee said that he believes a tighter monetary policy would do little to change the current level of inflation.

• Support levels: 1.2283, 1.2199, 1.2127
• Resistance levels: 1.2338, 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 looked for from the resistance level of 1.2338, but with additional confirmation. For buy deals, traders may consider the level of 1.2283 or 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 Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 129.24
• Prev Close: 129.15
• % chg. over the last day: -0.07%

Deputy Governor of the Bank of Japan Amamiya says that he does not expect further increases in energy and commodity prices. If his assumption is correct, inflation in Japan will fall again, and as a result, the Bank of Japan will continue its soft monetary policy, which is negative for the Japanese Yen.

• Support levels: 129.02, 126.91, 126.00, 125.57
• Resistance levels: 129.74, 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 is now trading between 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 129.02, but with confirmation. A resistance level of 129.74 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.

The USD/CAD currency pair

• Prev Open: 1.2915
• Prev Close: 1.2846
• % chg. over the last day: -0.54%

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 added another 3% yesterday as OPEC is suppressing any production increases. In turn, Canada’s economic indicators are showing growth, which along with low unemployment will force the Bank of Canada to move to a more aggressive monetary policy. This situation, along with rising oil prices, will strengthen the Canadian dollar.

• Support levels: 1.2774, 1.2692, 1.2644, 1.2607, 1.2521
• Resistance levels: 1.2875, 1.2904, 1.2953, 1.3000, 1.3052

The USD/CAD currency pair trend has changed to bearish in terms of technical analysis. The price broke through the priority change level and consolidated below the moving averages. The MACD indicator has become negative, and the sellers’ pressure has increased. It is worth trading only with short targets because fundamentally both the dollar index and the Canadian dollar are inclined to grow. Under such market conditions buy trades should be considered on the lower timeframes from the support level of 1.2774, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2875 or 1.2904, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.3000, the uptrend will likely be resumed.