The Analytical Overview of the Main Currency Pairs on 2022.06.16

The EUR/USD currency pair

• Prev Open: 1.0408
• Prev Close: 1.0447
• % chg. over the last day: +0.37%

The Federal Reserve raised its target interest rate by three-quarters of a percentage point and expected the economy to slow and US unemployment to rise in the coming months. Earlier economic data on Wednesday showed that US retail sales unexpectedly fell by 0.3% in May, the first decline in 5 months. As a result, the dollar index fell sharply, sending the EURUSD currency pair higher. In her speech yesterday, ECB head Christine Lagarde hinted that the ECB needs to be consistent in its policy, not aggressive. Traders likely should not expect the ECB to raise its rate by 0.5% in July aggressively. France’s inflation rate increased by 0.7% in May to 5.2% y/y.

• Support levels: 1.0408, 1.0379
• Resistance levels: 1.0503, 1.0570, 1.0611, 1.0680

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is clearly forming a flat structure. The MACD indicator has become inactive. Under such market conditions, sell deals can be considered from the resistance level 1.0503 or 1.0570, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0408, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0570 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone Italian Consumer Price Index (m/m) at 11:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1993
• Prev Close: 1.2172
• % chg. over the last day: +1.49%

The Bank of England will hold its monetary policy meeting today. The Bank of England is expected to raise interest rates for the fifth time to suppress inflationary growth amid slowing growth and a weakening currency. Some market participants call for the Monetary Policy Committee to implement a 50 basis point hike, but analysts are leaning more toward a 25 basis point move. The Organization for Economic Cooperation and Development predicts that Britain will be the weakest G-7 next year as higher interest rates, taxes, shrinking trade, and soaring food and energy prices will weigh on households.

• Support levels: 1.2104, 1.1974
• Resistance levels: 1.2199, 1.2265, 1.2363, 1.2422, 1.2470, 1.2523, 1.2629

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. But an initiative of buyers appeared. The MACD indicator has become positive, and the price has corrected to the average values. Under such market conditions, sell deals can be considered from the resistance level of 1.2199, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2104, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2363 resistance level and fixes above, the uptrend will likely resume.

• – UK BoE Interest Rate Decision at 14:00 (GMT+3);
• – UK BoE Monetary Policy Statement at 14:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 135.45
• Prev Close: 133.82
• % chg. over the last day: -1.44%

After the Fed meeting yesterday, investors are now turning their attention to the Bank of Japan, which has increased its bond purchases this week in an attempt to limit the rise in yields. The Central Bank is expected to stick to all of its key policy parameters when it concludes its meeting on Friday. In this case, the Bank of Japan risks putting more pressure on yields, accelerating the yen’s fall and increasing public concern over rising prices.

• Support levels: 133.50, 132.85, 132.00, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64
• Resistance levels: 135.16

The medium-term trend on the USD/JPY currency pair is bullish. The price started to form a wide range, and the MACD indicator became negative. It is best to wait for a slight correction, as the price strongly deviates from the average values. 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 USD/CAD currency pair

• Prev Open: 1.2928
• Prev Close: 1.2891
• % chg. over the last day: -0.28%

The Canadian dollar rose sharply yesterday amid a decline in the dollar index, which led to a decline in the USD/CAD quotes. The sharp decline in oil prices did not significantly impact the Canadian currency. The fundamental picture now is that both the US Fed and the Bank of Canada are on the way to raising the interest rates, so the confidence in this currency pair will often shift from one currency to the other.

• Support levels: 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2917, 1.2991

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price reached the resistance level and started to correct. The MACD indicator became negative, and sellers were slightly pressured. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2815. For sell deals, it is better to consider the resistance level of 1.2917, 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.