The Analytical Overview of the Main Currency Pairs on 2022.06.21

The EUR/USD currency pair

• Prev Open: 1.0475
• Prev Close: 1.0510
• % chg. over the last day: +0.33%

In her speech yesterday, ECB head Christine Lagarde indicated that the underlying inflation forecasts had been revised upward significantly. The ECB forecasts annual inflation at 6.8% in 2022, followed by projections of a decline to 3.5% in 2023 and 2.1% in 2024. The next steps for the ECB to normalize monetary policy are: stop net asset purchases under the program (APP) as of July 1, 2022; raise ECB key interest rates by 25 basis points at the July monetary policy meeting; raise interest rates again in September, the amount of which will depend on the updated medium-term inflation forecast; after September, the ECB will follow a path of gradual interest rate increases.

• Support levels: 1.0499, 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. But it looks like a trend will change soon, as sellers have stopped showing any activity. The price has corrected to the average values, the MACD indicator has become inactive, and the buyers’ pressure persists. Under such market conditions, sell deals can be considered from the resistance level of 1.0611, but only after the additional confirmation. A price move above 1.0611 will change the priority. Buy trades are best to look for on intraday time frames from the support level of 1.0499, 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.

• – US Existing Home Sales (m/m) at 17:00 (GMT+3);
• – US FOMC Mester Speaks at 19:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2218
• Prev Close: 1.2247
• % chg. over the last day: +0.24%

UK Monetary Policy Committee spokeswoman Mann pointed out yesterday that in the current environment, with historic inflation levels already evident and the US Fed tightening, UK exposure and sensitivity to global financial secondary effects could exacerbate the inflation-activity trade-off that the Bank of England is currently facing. British policymakers will have to roughly accept a tightening by the US to stabilize prices and mitigate inflationary pressures exerted by the exchange rate. In other words, the Bank of England does not know exactly how to proceed, as it refers to the fact that inflation in Britain and the US are rising for different reasons, but will act roughly the same.

• Support levels: 1.2176, 1.1974
• Resistance levels: 1.2265, 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. The price is trading between the two accumulative balances, but the buyers’ initiative remains in recent days. The MACD indicator has become inactive. Under such market conditions, sell deals can be considered from the resistance level of 1.2422, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2265, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2422 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 134.93
• Prev Close: 135.04
• % chg. over the last day: +0.08%

Prime Minister Fumio Kishida said yesterday that Bank of Japan Governor Haruhiko Kuroda expressed concerns about currency movements during their meeting, which briefly strengthened the yen. For his part, Kuroda said that the government and the central bank would continue to monitor currencies closely and cooperate to act appropriately. The Bank of Japan’s insistence on continued easing to support the economy and keep inflation stable contrasts with the wave of interest-rate hikes that has swept global central banks trying to cope with rising prices. The Bank of Japan’s dovish stance continues to contribute to the yen’s decline.

• Support levels: 134.74, 133.38, 131.67, 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 formed a narrow balance, and buyers’ pressure prevailed. Under such market conditions, buy trades can be considered from the support level of 134.74 or 133.38, 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 131.67, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3024
• Prev Close: 1.2980
• % chg. over the last day: -0.34%

The Canadian currency is a commodities currency and depends not only on the dollar index but also on the oil price movements. Oil prices increased yesterday as investors’ attention returned to oil and oil product shortages amid fears that a recession will hit demand. Rising oil prices are strengthening the Canadian dollar (USD/CAD decline).

• Support levels: 1.2903, 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2974, 1.3068

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator has become negative, and the pricehas corrected to the average values. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2903. For sell deals, it is better to consider the resistance level of 1.2974, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2815 support level, the downtrend will likely resume.

• – Canada Retail Sales (m/m) at 15:30 (GMT+3).