The Analytical Overview of the Main Currency Pairs on 2022.07.05

The EUR/USD currency pair

• Prev Open: 1.0415
• Prev Close: 1.0422
• % chg. over the last day: +0.07%

In his speech yesterday, ECB Vice President Luis de Guindos said that higher inflation in the Eurozone would remain for some time. The ECB expects that lower energy prices, eliminating supply disruptions related to the pandemic, and normalizing monetary policy will help inflation return to the 2% target in the medium term. But the war and the risk of further energy supply disruptions to the Eurozone still pose a significant downside risk. The ECB is still planning to raise interest rates by 0.25% at the July meeting and make another increase at the September meeting.

• Support levels: 1.0412, 1.0379
• Resistance levels: 1.0447, 1.0504, 1.0564, 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 is trading below the moving averages, and the MACD indicator has become inactive. The price is forming a flat again. Under such market conditions, sell deals can be considered from the resistance level of 1.0447 or 1.0504, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0412, 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 German Services PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2103
• Prev Close: 1.2102
• % chg. over the last day: -0.01%

The British pound sterling rose against the safe-haven currencies on Monday, helped by an improvement in global risk appetite during a calm trading session due to the US holiday weekend. The difference between the monetary policy of the Bank of England and the US Fed on higher inflation also put pressure on the pound. The Fed interest rate is currently at 1.75%, while the Bank of England rate is at 1.25%. Such an overbalance of the rate will contribute to a further decline in GBPUSD quotes in the medium term.

• Support levels: 1.2062, 1.2015, 1.1974
• Resistance levels: 1.2137, 1.2172, 1.2238, 1.2324, 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 situation is very similar to the euro. The price is trading below the moving averages, the MACD indicator has become inactive, and the price is forming a wide-volatile flat. Under such market conditions, sell deals can be considered from the resistance level of 1.2137 or 1.2172, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2062, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2324 resistance level and fixes above, the uptrend will likely resume.

• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – UK BoE Financial Stability Report (m/m) at 12:30 (GMT+3);
• – UK BoE Gov Bailey Speaks at 13:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 135.28
• Prev Close: 135.65
• % chg. over the last day: +0.27%

According to the BoJ’s former chief economist, Inflation in Japan will be higher and longer than the Bank of Japan now expects, making an upward revision to the price forecast likely later this month. But the revision will not mean that a change in monetary policy is imminent. The Bank of Japan will deliver its latest quarterly forecast on July 21. Its yield curve control program has come under heavy criticism in recent weeks because of increased speculation of tightening.

• Support levels: 135.67, 134.83, 133.35, 131.67, 131.00, 130.12, 129.48, 128.76
• Resistance levels: 136.57

The medium-term trend on the USD/JPY currency pair is bullish. Buyer pressure in recent days has been increasing again. The MACD indicator has become positive, and the price forms a wide balance. Under such market conditions, buy trades can be considered from the support level of 135.67, but with confirmation. A resistance level of 136.57 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 133.35, the downtrend will likely resume.

• – Japan Services PMI (m/m) at 03:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2877
• Prev Close: 1.2858
• % chg. over the last day: -0.15%

Canadian manufacturing activity fell slightly in June as inflationary pressures and material shortages held back production, and firms became less optimistic about future production. The manufacturing index fell to its lowest level since June 2020 to 50.9 from 55.6 in May. Consumer expectations for inflation rose, along with concerns about food, gas, and rent prices. Businesses expect high inflation over a more extended period. Both surveys reinforce calls for a 75 basis point rate hike at the next Bank of Canada decision on July 13.

• Support levels: 1.2847, 1.2781, 1.2701, 1.2616
• Resistance levels: 1.2914, 1.2957, 1.3045

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading in a wide corridor, a slight pressure from buyers prevails, and the MACD indicator does not show activity. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2847, but with confirmation. For sell deals, it is better to consider the resistance level of 1.2914, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2838 support level, the downtrend will likely resume.