The EUR/USD currency pair

• Prev Open: 1.0714
• Prev Close: 1.0734
• % chg. over the last day: +0.19%

The University of Michigan’s Sentiment Index fell to 58.4 in May from 65.2 in April, its lowest value since August 2011. The Core PCE index, part of the Fed’s inflation measure, was 4.9% y/y for April versus 5.2% y/y in March. It is the first index decline in 17 months. If taken in context with other measures of inflation, it could indicate that US inflation has stopped rising. This is a good sign that the Fed may not need to tighten monetary policy after the summer meetings.

• Support levels: 1.0724, 1.0643, 1.0680, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0759, 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 is positive again, but the divergence increased, which suggests it is getting harder for the price to move higher. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0724, but only with confirmation. Sell trades can be considered from the resistance level of 1.0759 but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

• – Eurozone Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – Eurozone EU Leaders Summit at 13:00 (GMT+3);
• – Eurozone Germany Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US FOMC Member Waller Speaks at 18:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2582
• Prev Close: 1.2625
• % chg. over the last day: +0.34%

Hedge fund analysts forecast five interest rate hikes of 25 basis points by December from the Bank of England. On the other hand, forward prices reflect a gloomy long-term outlook, showing that the Bank of England will eventually cut rates in two years. There is a high probability that the UK economy will fall into recession in the next 12 months.

• Support levels: 1.2635, 1.2512, 1.2437, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2669, 1.2698, 1.2770

The GBP/USD currency pair trend is bullish on the hourly time frame. The MACD indicator is positive, but the divergence is getting stronger, which indicates the weakness of the buyers. Under such market conditions, buy deals may be considered from the support level of 1.2635, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2669 or 1.2698, but with confirmation in the form of sellers’ initiative.

Alternative scenario: if the price breaks down through the 1.2437 support level and fixes below, the mid-term downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 127.13
• Prev Close: 127.10
• % chg. over the last day: -0.02%

Bank of Japan Governor Kuroda reiterated that the central bank should continue easing monetary policy to help the economy recover from the recession caused by the pandemic. Kuroda also pointed out that the yen depreciation was not only due to the Bank of Japan’s easing but also to other factors, such as rising import prices. The fundamental picture for the USD/JPY currency pair remains the same. The Fed is tightening monetary policy, while the Bank of Japan is pursuing a soft policy. As a result, USD/JPY quotes are inclined to grow in the medium term.

• Support levels: 126.25, 125.47
• Resistance levels: 127.81, 128.29, 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 has reduced, but buyers do not show initiative. Buy trades can be considered from the support level of 126.25, but with confirmation. For sell deals, resistance level 127.81 may be considered, but only with additional confirmation.

Alternative scenario: If the price fixes above 128.73, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2769
• Prev Close: 1.2719
• % chg. over the last day: -0.39%

Despite the unfavorable market sentiment, the Canadian dollar is performing much better than other currencies this year. The Central Bank of Canada is expected to raise rates by at least 50 basis points (bps) this week. But then, the Bank of Canada is also likely to pause, as Canada’s economic indicators are not showing recessionary sentiment. In the absence of new hawkish rhetoric, the interest rate hike path may soften a bit over the long term, putting pressure on the Canadian dollar (rising USD/CAD quotes).

• Support levels: 1.2692, 1.2644, 1.2607, 1.2521
• Resistance levels: 1.2728, 1.2765, 1.2807, 1.2893, 1.2953, 1.3000, 1.3052

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator has become bearish, but the sellers’ pressure is slowly decreasing due to the growth of divergence. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2692, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2728, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2893, the uptrend will likely resume.