The Analytical Overview of the Main Currency Pairs on 2022.05.24

The EUR/USD currency pair

• Prev Open: 1.0561
• Prev Close: 1.0691
• % chg. over the last day: +1.23%

ECB head Christine Lagarde said that they would start to normalize their monetary policy. The bond-buying program will be completed at the beginning of the third quarter. The interest rate will probably be raised closer to the end of the third quarter of 2022. If the ECB sees inflation stabilizing at 2% in the medium term, a gradual further normalization of interest rates to neutral rates would be appropriate. But the speed of the policy adjustment and its ultimate point will depend on how the medium-term inflation outlook evolves.

• Support levels: 1.0611, 1.0568, 1.0509, 1.0445, 1.0379, 1.0342
• Resistance levels: 1.0696, 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 is bullish. The MACD indicator became positive, but the divergence is increasing. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0611, but only with confirmation. Sell trades can be considered from the resistance level of 1.0723, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0508 support level and fixes below, the downtrend will likely resume.

• – US FOMC Member George Speaks at 02:00 (GMT+3);
• – Eurozone French Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – Eurozone Germany Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Germany Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3);
• – US Fed Chair Powell Speaks at 19:20 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 21:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2471
• Prev Close: 1.2586
• % chg. over the last day: +0.92%

Bank of England Governor Andrew Bailey said yesterday that the BoE is ready to raise interest rates if necessary. The UK is facing a huge negative impact on the real incomes of citizens caused by rising prices of imported goods, especially energy. Analysts are predicting another interest rate hike as soon as the next meeting.

• 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 1.2398 support level and fixes below, the mid-term downtrend will likely resume.

• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 127.87
• Prev Close: 127.88
• % chg. over the last day: +0.01%

Manufacturing activity in Japan grew at its slowest pace in the last three months in May as supply bottlenecks due to parts shortages and blockages in China due to Covid-19 led to slower growth in production and new orders. Japan’s manufacturing PMI index fell to 53.2 from 53.5. Going below 50 would be a sign of stagnation in the sector.

• 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 has become inactive, sellers’ pressure is weakening, and 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 128.45 may be considered, but only with additional confirmation.

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

• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2835
• Prev Close: 1.2769
• % chg. over the last day: -0.05%

The fundamental picture of the USD/CAD currency pair remains the same. The Bank of Canada is on the way to aggressive rate hikes, as well as the US Federal Reserve. But unlike the US, Canada has no signs that its economy is slowing down. Growth in energy prices gives confidence to the Canadian dollar because it is a commodity currency, but on the other hand, it leads to an increase in domestic fuel prices, which leaves some negative consequences for the economy. At the moment, both the Canadian dollar and the American dollar are inclined to rise, so investors should trade only short-term trends on this currency pair.

• Support levels: 1.2783, 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, which is a sign of sellers’ weakness. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2783, 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 resume.