By JustForex
Inflation data will be released in the US today. Analysts expect consumer prices to stay about the same, indicating a slowdown in price growth. But if the data turns out to be worse than forecasted and inflation rises again, it may boost the US dollar index on expectations of further aggressive interest rate hikes by the Fed.
From the technical point of view, the trend on the EUR/USD currency pair on the hour time frame is bullish. The price is still forming a wide volatile balance with the borders of 1.0112-1.0284. Under such market conditions, buy trades are best to consider on intraday time frames from the support level of 1.0200. Sell trades can be considered from the resistance level of 1.0233 or 1.0264, 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.
According to a SocGen strategist, the British pound could fall below $1.20 next month as the US Federal Reserve’s interest rate hike continues to outpace the Bank of England. According to the analyst, the Bank of England’s recent recession warning, combined with growing expectations of another 75 basis points US interest rate hike, could put the pound at risk of falling below $1.20. The pound has fallen 10% against the dollar since the beginning of the year, ranking among the three worst G-10 currencies.
From the technical point of view, the trend on the GBP/USD currency pair on the hour time is bullish, but now the price is forming a balance, where the sellers prevail. The MACD indicator has become inactive. If the price dips below 1.2063 again and stays lower, there will be a trend change. At the moment, it is better to look for buy trades on the intraday time frames from the support level of 1.2063, but only with a confirmation. Sell trades can be considered from the resistance level of 1.2098, but only after additional confirmation and with short targets.
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Alternative scenario: if the price breaks down through the 1.2063 support level and fixes below, the downtrend will likely resume.
In Japan, the Producer Price Index, which shows the factory inflation rate, declined from 9.4% to 8.6% annually. This indicates that the consumer inflation rate is also set to decline, which is bad for the Japanese currency as the Bank of Japan, on the contrary, aims to raise the consumer price level. Thus, traders should not expect any changes in the monetary policy of the central bank of Japan in the direction of tightening.
From the technical point of view, the medium-term trend on the USD/JPY currency pair is close to changing to the uptrend. The price is now trading at the priority change level but has not yet consolidated higher. A break of 135.29 will change the trend. Under such market conditions, buy trades can be sought from the support level of 134.29 or 133.42, but with additional confirmation. Resistance levels of 135.29 may be considered for sell deals, but only with additional confirmation in the form of a reverse initiative, as the price has already tested it.
Alternative scenario: If the price fixes above 135.29, the uptrend will likely resume.
Currently, the Bank of Canada and the US Federal Reserve keep interest rates at 2.5%, so parity prevails on the USD/CAD currency pair with a short-term shift of initiative from the dollar to the Canadian and vice versa. The labor market remains strong in both the US and Canada, which leaves room for central banks to raise interest rates further. Therefore, the only imbalance in the USD/CAD quotes will be oil. It is well known that the Canadian dollar is a commodity currency, so a rise in oil prices always gives confidence to the Canadian.
In terms of technical analysis, the USD/CAD currency pair trend has changed to bullish. At the moment, the price is trading at the level of moving averages. The MACD indicator has become inactive, and the volatility has declined in anticipation of inflation and oil reserves data. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2800, but only with confirmation and short targets. For sell deals, it is better to consider the resistance level of 1.2895 or 1.2926, but with confirmation.
Alternative scenario: if the price breaks out and consolidates below the 1.2786 support level, the downtrend will likely resume.
By JustForex
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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