The Analytical Overview of the Main Currency Pairs on 2022.07.26

The EUR/USD currency pair

• Prev Open: 1.0208
• Prev Close: 1.0218
• % chg. over the last day: -0.10%

The US central bank has no reason to get more hawkish, especially as the economy may be on the verge of recession. According to analysts, lower inflation expectations and an expected decline in the consumer price index are imminent in the coming months. It means that the Fed’s peak hawkishness has likely passed, removing a powerful bullish catalyst from the US dollar. On that basis, the most likely scenario of this week’s Fed meeting will be a 75 basis point rate hike. And this scenario is already priced in.

• Support levels: 1.0181, 1.0106, 1.0035, 1.0000
• Resistance levels: 1.0250, 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. The price is forming a wide balance, and the MACD indicator has become inactive, but the buyers’ pressure remains. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.0181 or 1.0106, but only with confirmation. Sell trades can be considered from the resistance level of 1.0250 or 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.

• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1993
• Prev Close: 1.2046
• % chg. over the last day: +0.44%

Despite gains in recent days, fundamentally, the British currency remains weak as the struggle for the Conservative Party leadership highlights the problems facing the country. The latest data from the US Commodity Futures Trading Commission shows that investors slightly reduced their net short positions in the sterling last week, halting a two-week rise but still keeping the market negative for the pound. As the race for the Prime Minister’s seat intensifies, analysts will be watching today’s televised debate between Foreign Secretary Liz Truss and former Finance Minister Rishi Sunak. Many expect UK policy to increase negative sentiment against the sterling in the coming months.

• Support levels: 1.2000, 1.1907, 1.1803
• Resistance levels: 1.2085, 1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. Buyers’ pressure has intensified. The MACD indicator is positive again, but there are signs of divergence. Under such market conditions, buy trades are best to look at intraday time frames from the support level of 1.2000, but only with confirmation. Sell trades can be considered from the resistance level of 1.2085, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.1907 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 136.09
• Prev Close: 136.65
• % chg. over the last day: +0.41%

According to the monetary policy minutes report, the Bank of Japan expects core consumer prices (excluding food and fuel) in Japan to rise by 2.3% this fiscal year on an annualized basis, mainly due to Russia’s invasion of Ukraine and the impact of yen depreciation. For the fiscal 2023 year, the forecasts are a 1.7% increase in consumer prices. Crude oil and other energy prices are expected to remain high. So, there are no fundamental reasons for the yen to strengthen at the moment, and the decrease in USD/JPY quotes occurs mainly due to the decline in the US Dollar Index.

• Support levels: 135.99, 135.40, 134.64, 134.11
• Resistance levels: 136.60, 137.26, 137.81, 138.25, 138.56, 140.29

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bearish. The price is trading below the moving averages. The MACD indicator is not active. It should be noted that any fundamental factors do not accompany the fall in the USD/JPY quotes, so selling is still a very cautious option. Under such market conditions, buy trades can be searched for intraday from the support level of 135.99, but with additional confirmation. For sell deals, traders can consider the resistance level of 136.60 or 137.26, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes above 138.25, the uptrend will likely resume.

• – Japan Monetary Policy Meeting Minutes (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2917
• Prev Close: 1.2846
• % chg. over the last day: -0.55%

The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian currency. The Bank of Canada, as well as the Fed, is on the path of aggressive interest rate increases. The difference between rates is minimal. The Central Bank of Canada holds the rate at 2.5%, while the Fed has a rate of 1.75%. A 0.75% rate hike on Wednesday would put both central banks’ rates at 2.5%. Therefore, traders should not expect a medium-term trend on the USD/CAD currency pair right now.

• Support levels: 1.2781
• Resistance levels: 1.2841, 1.2912, 1.3006, 1.3085, 1.3154

In terms of technical analysis, the trend on the USD/CAD currency pair is bearish. At the moment, the price is forming a balance and trading at the levels of the moving lines. The MACD indicator has become negative again. Under such market conditions, it is best to consider sell deals from the resistance level of 1.2841 or 1.2912, but with confirmation. Buy trades should be considered on the lower time frames from the support level 1.2781, but only with confirmation and short targets.

Alternative scenario: if the price breaks out and consolidates above the 1.3006 resistance level, the uptrend will likely resume.