The Analytical Overview of the Main Currency Pairs on 2022.07.21

The EUR/USD currency pair

• Prev Open: 1.0222
• Prev Close: 1.0181
• % chg. over the last day: -0.40%

The long-awaited ECB meeting will be held today, and the ECB is expected to raise the interest rate. Analysts are leaning towards a 0.25% hike, even though there is talk of a 0.5% hike as well. Christine Lagarde will not risk her reputation, so it is easier for the ECB to hold the first rate hike of 0.25% and the next by 0.5% or even 0.75%. The attention of investors will also be directed towards the so-called “anti-fragmentation” package, which is expected to be announced together with the interest rate decision.

• Support levels: 1.0154, 1.0106, 1.0035, 1.0000
• Resistance levels: 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 bullish. But yesterday, the price corrected a little, and the MACD indicator became inactive. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.0106, but only with confirmation. Sell trades can be considered from the resistance level of 1.0284, but only after additional confirmation and only with short targets.

Alternative scenario: if the price breaks down through the 1.0000 support level and fixes below, the downtrend will likely resume.

• – Eurozone ECB Monetary Policy Statement at 15:15 (GMT+3);
• – Eurozone ECB Interest Rate Decision at 15:15 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
• – Eurozone ECB Press Conference at 15:45 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1988
• Prev Close: 1.1978
• % chg. over the last day: -0.08%

In the UK, the Consumer Price Index reached 9.4% on an annual basis compared to 9.1% in May. Monthly inflation rose by 0.8%. The biggest upward contributions to the annual inflation rate were made by household services (mainly electricity, gas, and other fuels) and transportation (mainly due to higher gasoline and diesel prices). The last time this level of inflation was seen in the country was in March 1991. The Bank of England is likely to raise the interest rate immediately by 0.5% at its next meeting.

• Support levels: 1.1955, 1.1907, 1.1803
• Resistance levels: 1.2065, 1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price has slightly corrected and is trading at the level of the moving averages. The MACD indicator has become inactive. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.1955 or 1.1907, but only with confirmation. Sell trades can be considered intraday from the resistance level of 1.2065, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.1803 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 138.65
• Prev Close: 138.27
• % chg. over the last day: -0.27%

The Bank of Japan kept interest rates and monetary policy unchanged. The monetary policy report highlights concerns about the economy above any potential effects on the yen. The BoJ lowered its economic growth forecast for this year, so a falling economy needs continued support. The inflation forecast is 2.3% for the end of the year. Thus, the BoJ is still targeting stimulus despite a wave of interest rate hikes by other central banks. The medium-term uptrend on the USD/JPY currency pair continues.

• Support levels: 137.67, 137.43, 137.13, 136.48, 135.92, 135.40, 134.64, 134.11
• Resistance levels: 138.71, 140.29

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator has become positive, but the price is still forming a balance. Under such market conditions, buy trades can be sought intraday from the support level of 137.67, but with confirmation. For sell deals, traders can consider the resistance level of 138.71, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 137.13, the downtrend will likely resume.

• – BoJ Outlook Report at 06:00 (GMT+3);
• – BoJ Interest Rate Decision at 06:00 (GMT+3);
• – BoJ Press Conference at 06:00 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2868
• Prev Close: 1.2880
• % chg. over the last day: +0.09%

Canada’s consumer price level increased by 0.7% last month, twice below expectations. But the country’s annual inflation reached 8.1% after 7.7% in May. This is the highest rate since January 1983. Excluding gasoline and food prices, the Consumer Price Index reached 6.5% on an annual basis in June after 6.3% in May. The acceleration in June was mainly due to higher gasoline prices, but price increases remained broad-based, with seven of the eight major components up 3% or more. Thus, there is no evidence of a slowdown in inflation, which means Canada’s Central Bank will keep pace with the US Federal Reserve and raise interest rates.

• Support levels: 1.2853, 1.2781
• Resistance levels: 1.2934, 1.3006, 1.3085, 1.3154

In terms of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading below the moving average lines. The MACD indicator is in the negative zone, and sellers’ pressure remains, but there are the first signs of divergence. Under such market conditions, it is best to consider sell deals from the resistance level of 1.2934, but with confirmation. Buy trades should be viewed on the lower time frames from the support level 1.2853, but only with confirmation and short targets.

Alternative scenario: if the price breaks out and consolidates above the 1.3085 resistance level, the uptrend will likely resume.