The Analytical Overview of the Main Currency Pairs on 2022.06.17

The EUR/USD currency pair

• Prev Open: 1.0444
• Prev Close: 1.0552
• % chg. over the last day: +1.03%

Yesterday, European Central Bank President Christine Lagarde informed Eurozone finance ministers of the ECB’s plans to cap bond spreads. The new mechanism, which Central Bank officials are developing, is designed to prevent pressure from irrational market movements on individual European countries as the ECB embarks on its first interest rate hike. The euro jumped by 1% on this news.

• Support levels: 1.0473, 1.0408, 1.0379
• Resistance levels: 1.0611, 1.0680, 1.0723

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price has corrected to the average values, the MACD indicator became positive, and the buyers’ pressure is still there. Under such market conditions, sell deals can be considered from the resistance level 1.0611, but only after the additional confirmation. A price move above 1.0611 is not desirable for the sellers. Buy trades are best to look for on intraday time frames from the support level of 1.0473, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0611 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone Consumer Price Index (m/m) at 10:30 (GMT+3);
• – US Fed Chair Powell Speaks at 15:45 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2175
• Prev Close: 1.2352
• % chg. over the last day: +1.45%

The British pound rose sharply after the Bank of England implemented its fifth consecutive interest rate hike on Thursday to curb soaring inflation. The Monetary Policy Committee voted 6-3 to raise the bank rate by 25 basis points to 1.25%, with three dissenting members voting to raise it by 50 basis points to 1.5%. The committee also stated that it would take whatever action is necessary to bring inflation back to the 2% target over the medium term in a sustainable manner.

• Support levels: 1.2199, 1.1974
• Resistance levels: 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 became positive, and the price reached the priority change level. Under such market conditions, sell deals can be considered from the resistance level of 1.2363, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2199, 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.

The USD/JPY currency pair

• Prev Open: 133.81
• Prev Close: 132.21
• % chg. over the last day: -1.21%

The Bank of Japan kept interest rates ultra-low on Friday and its guidance to keep borrowing costs at “current or lower” levels, signaling its determination to focus on supporting economic recovery after the COVID-19 pandemic. In a sign that the recent sharp drop in the yen could impact the economy, the Central Bank said it would keep a close eye on how changes in the exchange rate could affect the economy. The growing divergence in monetary policy between Japan and the rest of the world has caused the yen to fall to a 24-year low.

• Support levels: 133.05, 131.67, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64
• Resistance levels: 134.21, 135.16

The medium-term trend on the USD/JPY currency pair is bullish. The price fell sharply yesterday to the priority change level. Still, buyers managed to hold their positions, and news about the Bank of Japan keeping its soft monetary policy led to new bullish momentum. Under such market conditions, buy trades can be considered from the support level of 133.05, but with confirmation. A resistance level of 134.21 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 131.67, the downtrend will likely resume.

• – Japan BoJ Interest Rate Decision at 06:00 (GMT+3);
• – Japan BoJ Monetary Policy Statement at 06:00 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2887
• Prev Close: 1.2945
• % chg. over the last day: +0.45%

Finance Minister Chrystia Freeland on Thursday expressed confidence in the Bank of Canada’s ability to curb rising inflation and prevent prices from taking hold but said there is no guarantee the economy will avoid a recession. To contain price increases, the Bank of Canada raised its benchmark interest rate by half a percentage point to 1.5% this month, the second increase in a row, and said it could act more decisively if necessary.

• Support levels: 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2970, 1.3051

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price forms a flat structure. The MACD indicator has become inactive. 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 1.2970, 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.