The Analytical Overview of the Main Currency Pairs on 2022.07.07

The EUR/USD currency pair

• Prev Open: 1.0266
• Prev Close: 1.0180
• % chg. over the last day: -0.84%

The euro fell to a new low in two decades as rising energy prices strengthened the attractiveness of the US currency as a safe haven and the Eurozone economy slipped into recession. Germany is running its first trade deficit since 1991. A significant difference in interest rates between the US Fed (1.75%) and the ECB (0.00%) negatively affects the EUR/USD exchange rate.

• Support levels: 1.0188
• Resistance levels: 1.0229, 1.0284, 1.0365, 1.0415, 1.0504, 1.0564, 1.0611

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving averages, the MACD indicator is in the negative zone, and there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.0229 or 1.0284, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0188, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0415 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone German Industrial Production (m/m) at 09:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting (m/m) at 14:30 (GMT+3);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US FOMC Member Bullard Speaks at 20:00 (GMT+3);
• – US FOMC Member Waller Speaks at 20:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1933
• Prev Close: 1.1921
• % chg. over the last day: -0.10%

More than 35 members of the British government resigned in less than 24 hours. One in five members of parliament who have held public office left his post. Boris Johnson is ignoring calls to step down despite the massive layoffs of officials. “The prime minister’s job is to lead the country through difficult times,” he said. Mr. Johnson added that millions voted for him and wondered if any potential successors could replicate his success in the next election. Despite the political problems, the Bank of England’s chief economist Hugh Pill is confident that the Bank of England will return inflation to its target level of 2%. However, he did not clarify when this would happen.

• Support levels: 1.1929
• Resistance levels: 1.2021, 1.2065, 1.2095, 1.2137

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, with the difference that the pound shows more stability. The price is trading below the moving averages, the MACD indicator is in the negative zone, and there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.2021, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1929, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2137 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 135.72
• Prev Close: 135.93
• % chg. over the last day: +0.15%

Japanese households’ inflation expectations have intensified over the past three months, with the share of homes expecting prices to rise next year, reaching the highest level in 14 years. At the same time, the Bank of Japan said it would not cancel its monetary stimulus because inflation is caused by a sharp rise in fuel and commodity prices caused by Russia’s invasion of Ukraine.

• Support levels: 135.41, 134.11, 133.35, 131.67, 131.00, 130.12, 129.48, 128.76
• Resistance levels: 135.87, 136.48

The medium-term trend on the USD/JPY currency pair is bullish. Buyer’s pressure in recent days is increasing again. The MACD indicator has become inactive as the price continues to form a wide balance. Under such market conditions, buy trades can be considered from the support level of 135.41, but with confirmation. A resistance level of 135.87 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.

The USD/CAD currency pair

• Prev Open: 1.3022
• Prev Close: 1.3034
• % chg. over the last day: +0.09%

The Canadian dollar is a commodity currency, so it highly depends on instruments like the dollar index and oil. The American dollar continued to rise yesterday, while WTI oil prices dropped below $95 a barrel. As a result, USD/CAD quotes increased at the opening session but began to decline by the end of the day due to the recovery of oil prices. It should be noted that the Bank of Canada is on the way to tightening interest rates and is practically moving in step with the US Federal Reserve. The Fed rate is now at a 1.75% level, and the Bank of Canada rate is 1.50%. This means that the Canadian dollar has a basis for strengthening, especially if oil rates start to rise again, which is very likely as the supply shortage is still there.

• Support levels: 1.2998, 1.2959, 1.2934, 1.2894
• Resistance levels: 1.3035, 1.3052, 1.3077

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator fell to zero level. Under such market conditions, waiting for a small pullback is better, as the price has strongly deviated from the average lines. It is best to look for buy trades on the lower time frames from the support level of 1.2998 or 1.2959, but better with additional confirmation. For sell deals, it is best to consider the resistance level of 1.3035, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2894 support level, the downtrend will likely resume.

• – Canada Ivey PMI (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+3).