The Analytical Overview of the Main Currency Pairs on 2022.05.23

The EUR/USD currency pair

• Prev Open: 1.0581
• Prev Close: 1.0560
• % chg. over the last day: -0.20%

According to the latest Eurostat data, consumer confidence in Europe is declining. ECB representative Visco believes that Europe may face a moderate recession, which may worsen depending on the circumstances related to the war in Ukraine. Asked about a 50 basis point interest rate hike, Visco said the ECB should come out of negative rates without adding uncertainty to the market. Analysts are confident that the ECB will start raising rates this summer. This is the reason why the euro has started to strengthen, as future scenarios are always priced in.

• Support levels: 1.0545, 1.0509, 1.0445, 1.0379, 1.0342
• Resistance levels: 1.0595, 1.0646, 1.0723, 1.0766, 1.0799, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. The price broke through the priority change level and consolidated above the moving averages. The MACD indicator became positive, but a divergence appeared. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0545, but only with short targets and confirmation. Sell trades can be considered from the resistance level of 1.0595, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0445 support level and fixes below, the downtrend will likely resume.

• – Eurozone Germany Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – Eurozone Eurogroup Meetings (Tentative).

The GBP/USD currency pair

• Prev Open: 1.2461
• Prev Close: 1.2491
• % chg. over the last day: +0.24%

Former Bank of England Governor Mervyn King criticized central banks, including the Bank of England, blaming them for the cost of living crisis, fueling rising inflation, and printing hundreds of billions of pounds and dollars during the pandemic. At the same time, Lord King added that the British should prepare for a “very unpleasant period,” as a sharp rise in interest rates would hit the economy very hard. According to the former governor, interest rates have been kept too low for too long, with too much “quantitative easing” (QE) when banks print money to pump up the economy.

• Support levels: 1.2485, 1.2437, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2602, 1.2695, 1.2792, 1.2981

On the hourly time frame, the GBP/USD currency pair trend changed to bullish. The MACD indicator became positive, but divergence appeared. Under such market conditions, buy deals may be considered from the support level of 1.2485, but only with additional confirmation. Sell deals should be looked for from the resistance level of 1.2602, but with confirmation in the form of sellers’ initiative.

Alternative scenario: if the price breaks down through the 1.2282 support level and fixes below, the mid-term downtrend will likely be resumed.

• – UK BoE Gov Bailey Speaks at 19:15 (GMT+3).

The USD/JPY currency pair

• Prev Open: 127.70
• Prev Close: 127.91
• % chg. over the last day: +0.16%

A conflict between the government and the Bank of Japan is growing in Japan. Japanese Prime Minister Kishida believes that rising commodity prices and a weak yen are negatively affecting households and businesses. In turn, Bank of Japan Governor Kuroda said that the Bank of Japan will continue with its soft monetary policy, as inflation is still unsustainable, even if it has reached the target level.

• Support levels: 127.46, 126.91, 126.00, 125.57
• Resistance levels: 127.94, 128.45, 128.73, 129.07, 130.12, 130.99

The medium-term trend on the USD/JPY currency is bearish. The MACD indicator is in the negative zone, but sellers’ pressure is getting weaker; there are signs of divergence. Buy trades can be considered from the support level of 127.46, but with confirmation. For sell deals, resistance level of 127.94 may be considered, but only with additional confirmation.

Alternative scenario: If the price fixes above 129.07, the uptrend will likely be resumed.

The USD/CAD currency pair

• Prev Open: 1.2823
• Prev Close: 1.2836
• % chg. over the last day: +0.10%

The Bank of Canada is on the way to aggressive rate hikes, just like the US Fed. But unlike the US, Canada is showing no signs of a slowing economy. Recent indicators point to solid growth and a strong labor market. Rising energy prices give confidence to the Canadian dollar, as the Canadian dollar is a commodity currency. But, on the other hand, it leads to the growth of domestic fuel prices, which leaves some negative consequences, not in favor of the economy.

• Support levels: 1.2789, 1.2774, 1.2692, 1.2644, 1.2607, 1.2521
• Resistance levels: 1.2826, 1.2859, 1.2953, 1.3000, 1.3052

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator has become inactive, while there is a divergence, signifying sellers’ weakness. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2774 or 1.2789, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2826, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2953, the uptrend will likely be resumed.