The US dollar index rose for the second week in a row, helped by rising Treasury interest rates.

The EUR/USD currency pair

• Prev Open: 1.0734
• Prev Close: 1.0676
• % chg. over the last day: -0.54 %

Speaking at the Warwick Economics Summit on Saturday, Bank of Italy Governor Ignazio Visco pointed out that the extreme uncertainty the ECB is experiencing today must necessarily imply a continued tightening of monetary policy to avoid the possibility of related secondary effects. Visco also added that if there are signs of a wage spiral and inflation expectations become insufficiently anchored, a further and significant tightening of monetary policy will certainly be warranted. Thus, the ECB remains on an aggressive path of policy tightening until at least May.

• Support levels: 1.0651, 1.0597
• Resistance levels: 1.0728, 1.0838, 1.0906, 1.0926, 1.0967, 1.1017, 1.1077

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages. The MACD indicator has become negative, but divergence can be seen on several timeframes. Under such market conditions, buy trades are best considered from the support level of 1.0651 but with confirmation in the form of a reverse impulse. Sell deals can be considered from the resistance level of 1.0728, but it is better with confirmation in the form of the initiative on the lower time frames.

Alternative scenario: if the price breaks down through the resistance level of 1.0926 and fixes above it, the uptrend will likely resume.

• – US FOMC Member Bowman Speaks at 15:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2113
• Prev Close: 1.2052
• % chg. over the last day: -0.51 %

Friday’s data showed that UK GDP declined by 0.5% for the month, but quarterly GDP was 0.0%, indicating that the economy has not grown in the last 3 months but has avoided a technical recession for now. Industrial production was up by 0.3%. Economic activity in Britain has stagnated mainly because of energy price pressures on households and businesses, with the Bank of England believing that the economy is probably already in recession. This is a negative factor for the British pound, as the Bank of England has no room for further policy tightening, unlike the US Federal Reserve and the Bank of Canada.

• Support levels: 1.2040, 1.2073, 1.2000, 1.1930
• Resistance levels: 1.2150, 1.2202, 1.2147, 1.2202, 1.2311, 1.2416

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving averages. The MACD indicator has become negative, and sellers dominate within the day. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2040 or 1.2000, but with a confirmation in the form of an initiative and short targets. It is better to look for sell trades after a pullback to the resistance level of 1.2150, but it is also better with a confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks out through the 1.2416 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 131.55
• Prev Close: 131.41
• % chg. over the last day: +0.08 %

The policy leader of the ruling Liberal Democratic Party of Japan said that the country’s soft monetary policy should be maintained. Investors are keeping a close eye on who might be appointed head of the Central Bank, as it could signal a change or continuation of Japan’s ultra-easy monetary policy. Financial markets were surprised that the Japanese government decided to nominate Kazuo Ueda as governor of the Bank of Japan after Deputy Governor Masayoshi Amamiya reportedly refused this role. Amamiya was thought to provide some continuity to Kuroda’s policies. Investors forecast strong uncertainty in yen trading until a new governor is appointed.

• Support levels: 131.45, 129.68, 129.98, 129.19, 129.04, 128.16
• Resistance levels: 132.37, 132.95, 133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. On Friday, the price tested the support level of 130.34 in the “discount” zone, where the correction was finished. The MACD indicator is in the positive zone, and there is slight buying pressure. Buy trades are best to look for from the support level of 131.45, but only with confirmation on the lower time frames. Sell deals can be sought from the resistance level of 132.37, but it is also better with confirmation in the form of reverse initiative.

Alternative scenario: If the price fixes below the support level of 128.16, the downtrend will be renewed with a high probability.

The USD/CAD currency pair

• Prev Open: 1.3447
• Prev Close: 1.3344
• % chg. over the last day: -0.77 %

Canadian labor market data on Friday showed that the economy added 150,000 jobs (forecast 15,000, prev. 104,000), and the unemployment rate remained at 5.0%. Such strong labor market data challenges the Bank of Canada’s “pause.” With GDP growth and a strong labor market, the Bank of Canada has room for maneuvering in terms of further policy tightening to surely tame inflation even more. And the Bank of Canada may well take this opportunity not to increase the difference in interest rates with the US Federal Reserve. Therefore, the Canadian dollar may get some short-term fundamental support, especially if oil prices continue to rise.

• Support levels: 1.3333, 1.3295, 1.3212
• Resistance levels: 1.3472, 1.3496, 1.3520, 1.3554, 1.3595

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price has corrected to the “discount” market area, where traders can look for great buying points. The MACD indicator is in the negative zone, and there is no sign of divergence, which is not very good for buying. Sell deals are worth considering from the resistance level of 1.3416 but on the condition of a reverse reaction. Buy trades can be considered from the support of 1.3333, but with additional confirmation in the form of an impulse initiative on the lower time frames.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3263, the downtrend will likely resume.