The EUR/USD currency pair

• Prev Open: 1.0197
• Prev Close: 1.0225
• % chg. over the last day: +0.27%

Inflation in the Eurozone broke another record and rose to 8.9% in July (8.6% in June). The energy price boom continues, and the geopolitical factors behind it show no signs of abating. The Overall Energy Index increased to 39.7% y/y as gas prices continue to rise and their carryover to consumer prices increases. Along with energy, food has become a very large contributor to inflation as food prices have already increased to 9.8% y/y. Eurozone GDP showed growth of +0.7%, which came as a surprise to analysts. Spain, France, and Italy showed the most considerable GDP growth. Germany’s GDP was unchanged from January-March. Germany was one of the countries hit hardest by high energy prices and problems in global supply chains.

• Support levels: 1.0112, 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. The price is still forming a wide volatile balance, and buyer pressure prevails now. The MACD indicator is in the positive zone. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 1.0112. 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 1.0112 support level and fixes below, the downtrend will likely resume.

• – German Retail Sales (m/m) at 09:00 (GMT+3);
• – Spanish Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – Italian Manufacturing PMI (m/m) at 10:45 (GMT+3);
• – French Manufacturing PMI (m/m) at 10:50 (GMT+3);
• – German Manufacturing PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2165
• Prev Close: 1.2174
• % chg. over the last day: +0.07%

The Bank of England intends to accelerate its fight against inflation. The Bank of England will hold its monetary policy and interest rate meetings this week, where it is expected (70% probability) to raise the rate by another 0.5%. This move will mark the UK’s most significant interest rate hike in 27 years. Bank of England governor Andrew Bailey suggested at a previous speech that this hike would not be the last, saying that policymakers are willing to act “decisively” if necessary to combat inflation. It should not be forgotten that there is a struggle for the Prime minister’s chair in Britain. Foreign Secretary Liz Truss has promised tax cuts if she wins the race for the leadership of the ruling Conservative Party. Former Chancellor of the Exchequer Rishi Sunak says this will increase inflation, forcing interest rates to go even higher.

• Support levels: 1.2150, 1.2114, 1.2063, 1.1907, 1.1803
• Resistance levels: 1.2191, 1.2238, 1.2294

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. But sellers’ pressure is increasing again. The MACD indicator is in the positive zone but shows signs of divergence already in several time frames. Under such market conditions, it is better to look for buy trades on the intraday time frames from the support level 1.2150 or 1.2114, but only with confirmation. Sell trades can be considered from the resistance level of 1.2191, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.2006 support level and fixes below, the downtrend will likely resume.

• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 134.23
• Prev Close: 133.21
• % chg. over the last day: -0.76%

Japan included currency response measures as items to consider in its fiscal year 2023 budget, which is due later this year, budget guidance showed Friday, warning investors against selling the yen. Currencies are rarely mentioned in the annual budget guidance, so the inclusion underscores policymakers’ concerns about the rapid sell-off in the yen, which has raised living costs and hurt the terms of trade underscored by the trade deficit.

• Support levels: 131.67, 130.99
• Resistance levels: 133.17, 134.00, 135.10, 136.03, 137.11

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bearish. In the last trading sessions, the Japanese yen is getting stronger. The MACD indicator has become negative, and the sellers’ pressure is still there, but there are signs of divergence. Under such market conditions, buy trades can be sought from the support level of 131.67, but with additional confirmation. Resistance levels of 133.17 or 134.00 may be considered for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes above 136.03, the uptrend will likely resume.

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

The USD/CAD currency pair

• Prev Open: 1.2806
• Prev Close: 1.2804
• % chg. over the last day: -0.02%

Real Gross Domestic Product (GDP) was unchanged in May after growing 0.3% in April. Growth in service-producing industries (+0.4%) was offset by a decline in goods-producing industries (-1.0%). Canada’s manufacturing sector contracted by 1.7% in May after seven months of growth. Output rose in the construction, manufacturing, accommodation, and catering sectors. Declines were recorded in mining, quarrying, oil and gas extraction, financial and insurance, and professional scientific and technical services sectors.

• Support levels: 1.2781
• Resistance levels: 1.2880, 1.2923, 1.3006, 1.3085, 1.3154

In terms of technical analysis, the USD/CAD currency pair trend is bearish. Currently, the price is forming a wide balance and trading on the lower border of the descending channel. The MACD indicator is in the negative zone, but there is a divergence, which indicates that it is harder for the price to move lower. Under such market conditions, it is better to consider sell deals from the resistance level of 1.2880, but with confirmation. Buy trades should be considered on the lower time frames from the support level of 1.2781 or from the lower border of the channel, 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.