The EUR/USD currency pair

• Prev Open: 1.0176
• Prev Close: 1.0040
• % chg. over the last day: -1.35%

The euro fell to $1.0005 against the US dollar, its lowest level since December 2002. The dollar index rose on expectations that the Fed will continue to aggressively raise rates, fighting rising inflation, while the energy crisis leads the Eurozone into recession. The euro could fall to $0.90 against the dollar if Russia stops supplying oil to Europe, a Bloomberg portfolio manager said last week. Today, traders’ attention will be focused on July’s ZEW economic sentiment index, which is one of the leading indicators of Europe’s economic outlook. Analysts expect Germany’s ZEW index to fall to -39 from -28. If the data is worse than expected, it might be positive for the euro as, in this case, the ECB will need to raise interest rates more decisively, which might give some impulse to the euro’s growth.

• Support levels: 1.0000
• Resistance levels: 1.0185, 1.0221, 1.0284, 1.0365, 1.0415, 1.050

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, but the divergence is already observed in several timeframes. Under such market conditions, sell deals can be considered from the resistance level of 1.0185, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0000, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0364 resistance level and fixes above, the uptrend will likely resume.

• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone EU Economic Forecasts, tentative.

The GBP/USD currency pair

• Prev Open: 1.2004
• Prev Close: 1.1890
• % chg. over the last day: -0.95%

On Monday, Bank of England Governor Andrew Bailey said he still believes inflation is likely to fall sharply next year. This situation is broadly in line with forecasts the British central bank presented in early May. However, Bailey said that a possible further increase in gas prices following Russia’s invasion of Ukraine or more sustained pressure on domestic costs could change the situation. The Bank of England had previously forecast that inflation would peak at just over 11% this October. Last month, the Bank of England said it was prepared to act decisively if necessary to prevent high inflation from taking root in the economy. Policymakers are assessing how much of a shock to income from high energy prices will cool inflation at the expense of lower spending on other goods and services.

• Support levels: 1.1877, 1.1801
• Resistance levels: 1.2002, 1.2065, 1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. In contrast to the euro, the pound is showing more resilience, but it is also declining against the strengthening dollar. The MACD indicator has turned negative, but there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.2002, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1877 or 1.1801, 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.v

• – UK BoE Gov Bailey Speaks at 20:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 136.01
• Prev Close: 137.47
• % chg. over the last day: +1.03%

Japan’s ruling coalition has expanded its majority in the upper house elections, and investors interpreted this result as a negative one for the Japanese Yen as people support the politicians who, in turn, are supporting soft monetary policy. Bank of Japan Governor Haruhiko Kuroda confirmed yesterday that he would not hesitate to add stimulus if necessary to stimulate the economy. Rising Treasury yields also provided an additional boost to the dollar, which rose against most of its major peers.

• Support levels: 137.08, 136.48, 135.92, 135.40, 134.64, 134.11
• Resistance levels: 137.48, 138.89

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator is in the positive zone, and the price continues to trend upward. Under such market conditions, buy trades can be considered from the support level of 137.08 or 136.48, but with confirmation. A resistance level of 137.48 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 135.93, the downtrend will likely resume.

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2947
• Prev Close: 1.3003
• % chg. over the last day: +0.43%

The Canadian dollar is a commodity currency, so it highly depends on on the dollar index and oil prices. Oil prices drifted yesterday while the dollar index rose, which caused the USD/CAD to grow. Traders should not forget that both the US Fed and the Bank of Canada are on the path of aggressive interest rate hikes, which creates a kind of parity between the currencies. Also, a lot depends on oil, where the situation is very uncertain. On the one hand, the supply shortage in the background of high demand in summer pushes oil prices up. On the other hand, the Fed is aggressively raising interest rates, which leads to the growth of the dollar index. Dollar-denominated commodities, including oil, are usually not in demand from overseas buyers when the US currency is rising.

• Support levels: 1.2959, 1.2934, 1.2894
• Resistance levels: 1.3018, 1.3050

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading above the moving averages, and there is buying pressure. Under such market conditions, it is best to look for buy trades on the lower time frames from the support level of 1.2959 or 1.2934. For sell deals, it is best to consider the resistance level of 1.3018, 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.