The Analytical Overview of the Main Currency Pairs on 2022.05.31

The EUR/USD currency pair

• Prev Open: 1.0734
• Prev Close: 1.0779
• % chg. over the last day: +0.42%

Consumer prices in European countries are increasing again. Spain’s annual inflation rate jumped from 8.3% to 8.7%, while Germany’s inflation rate rose from 7.4% to 7.9% (y/y). France and Italy will release their data today, and then the total CPI data for the Eurozone will be updated. Analysts expect inflation in Europe to rise from 7.5% to 7.8% (y/y). If the actual data turns out to be worse than expected, the euro may see a new momentum, as the ECB will have to tighten its monetary policy more aggressively. Conversely, if the fact will be better than the forecast, the euro may decline.

• Support levels: 1.0719, 1.0643, 1.0680, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0764, 1.0786, 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 has become inactive, but the divergence is still present, indicating that it is getting harder for the price to move up. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0719, but only with confirmation and short targets. Sell trades can be considered from the resistance level of 1.0764 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 French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Eurozone French GDP (q/q) at 09:45 (GMT+3);
• – Eurozone German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone EU Leaders Summit at 13:00 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2606
• Prev Close: 1.2647
• % chg. over the last day: +0.33%

Forecasts for the UK economy until the end of the year are disappointing. Analysts see a decline in almost all economic indicators. The strengthening of the British currency in recent days has more to do with the strengthening of the dollar index than with the fundamental support of the pound.

• Support levels: 1.2515, 1.2437, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2640, 1.2669, 1.2698, 1.2770

On the hourly time frame, the GBP/USD currency pair trend is bullish. But the MACD indicator has become negative, while the divergence is still present, which indicates the weakness of the buyers. Under such market conditions, buy deals may be considered from the support level of 1.2515, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2640, but with confirmation.

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: 126.97
• Prev Close: 127.60
• % chg. over the last day: +0.50%

The fundamental picture for the USD/JPY currency pair remains the same. The Fed is tightening monetary policy, while the Bank of Japan, on the contrary, holds a soft policy, and nothing will change in the near future. As a rule, monetary tightening leads to a strengthening of the national currency, while easing, on the contrary, leads to depreciation. As a result, USD/JPY quotes tend to grow in the medium term. Japan’s unemployment rate fell from 2.6% to 2.5%, while industrial production has unexpectedly decreased by 1.3% over the past month.

• Support levels: 127.78, 127.64, 127.24, 127.04
• Resistance levels: 128.29, 128.73, 129.07, 130.12, 130.99

The medium-term trend on the USD/JPY currency is close to changing to bullish. Buyers began to show initiative, the MACD indicator became positive and the price consolidated above the moving averages. Buy trades can be considered from the support level of 127.78 or 127.64, but with confirmation. For sell deals, resistance level of 128.29 may be considered, but only with additional confirmation.

Alternative scenario: If the price fixes above 128.29, the uptrend will likely resume.

• – Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2725
• Prev Close: 1.2654
• % chg. over the last day: -0.56%

EU leaders have agreed that the latest package of sanctions against Russia will include a partial oil embargo. The sanctions prohibit the purchase of crude oil and oil products from Russia delivered to other states by sea, but make a temporary exception for pipeline oil. Due to the backdrop of growing demand in the US and reduced blockages in China, with limited supply, oil prices began to rise as expected. The Canadian dollar is a commodity currency, so rising oil prices strengthen the Canadian currency, even as the dollar index rises.

• Support levels: 1.2652, 1.2608, 1.2566, 1.2510
• 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 is in the negative zone, but sellers’ pressure is slowly decreasing because of the divergence growth. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2652 or 1.2608, 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.

• – Canada GDP (q/q) at 15:30 (GMT+3).