by JustForex
Germany’s inflation rate increased by 0.9% last month to 7.9% annually (the highest level since 1973). The main reason for the high inflation is still rising energy prices. At the same time, the ZEW economic sentiment indicator for Germany rose over the past month. The report indicates that financial market experts are less pessimistic about the economy. However, the economy is still exposed to numerous risks, such as the effects of sanctions against Russia, the unclear pandemic situation in China, and the gradual change in the ECB’s monetary policy. The report also indicates that inflation expectations in the Eurozone have declined again. Still, ECB officials clearly state that rising inflation across the EU is of great concern to policymakers.
From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. There are signs that the fall has slowed down and turned into a flat structure. The MACD indicator is in the negative zone but without any signs of sellers’ pressure. Under such market conditions, it is better to wait for a small pullback, as the price has strongly deviated from the averages. Sell deals can be considered from the resistance level 1.0509 or 1.0563, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0379, but only with confirmation and short targets.
Alternative scenario: if the price breaks out through the 1.0680 resistance level and fixes above, the uptrend will likely resume.
The UK-US government bond yield spread is renewing multi-year lows, signaling the continuation of this currency pair’s downtrend. At the same time, tighter monetary policy from the US Federal Reserve strengthens the dollar index, which is negative for the British currency. Economic indicators also are not encouraging. The British unemployment rate increased from 3.7% to 3.8% last month.
From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The MACD indicator is in the negative zone with signs of oversold and divergence. Under such market conditions, it is better to wait for a small pullback, as the price has strongly deviated from the averages. Sell deals can be considered from the resistance level of 1.2127, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1974, but only with confirmation and short targets.
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Alternative scenario: if the price breaks out through the 1.2422 resistance level and fixes above, the uptrend will likely resume.
The Bank of Japan stepped up its policy defense yesterday, unveiling a new set of unscheduled purchases, including purchases with much longer maturities. These sharp moves reflect the Bank of Japan’s desire to defend its yield curve adjustment policy, even if it would cause the yen to fall further as the Federal Reserve accelerates the pace of rate hikes. Governor Haruhiko Kuroda insists that it is too early for Japan to retreat from ultra-low rates, as the economy is still recovering from the pandemic and inflation is largely driven by rising energy prices. The majority of economists surveyed expect the Bank to stick with its policy this week.
The medium-term trend on the USD/JPY currency pair is bullish. But there are signs of slowing, and divergence on the MACD indicator is already observed in several time frames. It is best to wait for a slight correction, as the price has deviated strongly from the average lines. Buy trades can be considered from the support level of 132.85, but with confirmation. A resistance level of 135.16 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.
Alternative scenario: If the price fixes below 132.00, the downtrend will likely resume.
The bets of a major interest rate hike by the Bank of Canada next month are rising rapidly amid expectations of a rate hike by the Federal Reserve. There is now an 80% probability of a 0.75% rate hike at the Canadian central bank’s July 13 meeting, bringing the interest rate to 2.25%. Last week, traders estimated a roughly 50% chance of such a hike. The growth of the dollar index provokes the growth of USD/CAD quotes even though oil prices remain at their highs.
In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is growing steadily, but there are signs of a slowdown. The MACD indicator shows overbought and there are signs of divergence. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2881. For sell deals, it is better to consider the resistance level of 1.2991, but it is also better with confirmation and short targets.
Alternative scenario: if the price breaks through and consolidates below the 1.2709 support level, the downtrend will likely resume.
by JustForex
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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