InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0261
• Prev Close: 1.0165
• % chg. over the last day: -0.94%

New tensions between the US and China triggered a rise in the US dollar. Investors returned to safe-haven assets yesterday amid growing tensions between the US and China over a visit by the US speaker to the island of Taiwan, which China considers its territory. Also, the dollar was strengthened by Fed officials’ statements, which indicated that a 0.75% rate hike at the September meeting is also under active consideration. A possible economic slowdown is needed to slow inflation. The euro and other assets fell against the dollar.

• Support levels: 1.0112, 1.0035, 1.0000
• Resistance levels: 1.0191, 1.0264, 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, but the sellers’ initiative has replaced the buyers’ pressure. The MACD indicator has become negative. 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 1.0191 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.

• – US FOMC Member Bullard Speaks (m/m) at 01:45 (GMT+3);
• – German Services PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
• – US ISM Services PMI (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2241
• Prev Close: 1.2161
• % chg. over the last day: -0.65%

The Bank of England will hold its monetary policy and interest rate meeting tomorrow. Five consecutive 25 basis point hikes have raised the bank rate to 1.25%, but actual inflation continues to rise, and inflation expectations remain dangerously high. Three bank officials last time wanted a 50 basis point increase, and with the economy’s apparent growing problems, a majority may now favor a larger move. Also, tomorrow, the Bank of England is due to present a plan to reduce its balance sheet. QE is still a whopping £843.8 billion, and just last month, Bank of England Governor Bailey said that the Central Bank was considering cutting its assets.

• Support levels: 1.2152, 1.2114, 1.2114, 1.2063, 1.1907, 1.1803
• Resistance levels: 1.2203, 1.2294

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is now balanced and trading between the moving averages. The MACD indicator is in the negative zone, and there is an initiative from the sellers. Under such market conditions, it is better to look for buy trades on the intraday time frames from the support level 1.2152 or 1.2114, but only with confirmation. Sell trades can be considered from the resistance level of 1.2203, 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 Services PMI (m/m) at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 131.69
• Prev Close: 133.15
• % chg. over the last day: +1.11%

The Japanese yen was on track for its biggest gain since the coronavirus crisis in March 2020, as growing tensions between the US and China over Taiwan and deepening fears of a global economic slowdown increased the appeal of safe-haven assets. Against the dollar, the Japanese currency brought its cumulative gains to nearly 4.5% in five trading sessions. But the US dollar is also a safe-haven currency, so yesterday, it closed the day in the background of the dollar index growth. It is also worth keeping in mind that the US Federal Reserve is on the path to higher interest rates, while the Bank of Japan keeps its monetary policy soft. Such opposite policy plays in favor of USD/JPY quotes growth.

• Support levels: 132.42, 131.37, 130.85
• Resistance levels: 133.17, 134.00, 135.29, 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 has strengthened, but yesterday the dollar intercepted the initiative. The MACD indicator became positive. Under such market conditions, buy trades can be sought from the support level of 132.42 or 131.37, but with additional confirmation. Resistance levels of 134.00 may be considered for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes above 135.29, the uptrend will likely resume.

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

The USD/CAD currency pair

• Prev Open: 1.2841
• Prev Close: 1.2879
• % chg. over the last day: +0.29%

USD/CAD quotes increased yesterday on the back of a rising dollar and because of lower oil prices. The Canadian weakness was also affected by the manufacturing data. The manufacturing PMI fell from 54.6 to 52.5. The latest survey showed a new decline in production and new orders, while employment growth slowed. The sector was hit particularly hard in July by a drop in export sales. Cost pressures continued on the price front, with higher material, food, and transportation costs often cited as the main drivers of inflation.

• Support levels: 1.2786
• 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. At the moment, the price is forming a wide balance. The MACD indicator became positive, and there was an initiative of buyers. 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 1.2786 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.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0212
• Prev Close: 1.0260
• % chg. over the last day: +0.47%

European manufacturing PMI dipped below the level of 50 in July. This usually means that a country is approaching a recession. It is a preliminary and rough indicator, but the statistics show that a drop of 50 triggers recessive processes in the country. The Central Bank has begun to work toward easing monetary policy. In Spain, the Index fell from 52.6 to 48.7, Italy from 50.9 to 48.5, France from 49.6 to 49.5, Germany from 52 to 49.3, and the overall Eurozone PMI fell from 52.1 to 49.8. With the ECB just starting to tighten monetary policy and raise interest rates, Europe will slowly deepen into recession. Winter will not be easy for Europe.

• 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.

• – US JOLTs Job Openings (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2164
• Prev Close: 1.2254
• % chg. over the last day: +0.74%

The UK manufacturing PMI declined from 52.8 to 52.1, which is better than the rest of Europe. Output fell for the first time in more than two years as new orders and export shipments continued to fall. The PMI held above the 50 mark thanks to faster job growth, increased inventories of purchases, and longer lead times for suppliers. Manufacturing output declined for the first time since May 2020, largely reflecting the downturn in the consumer and intermediate goods sub-sectors.

• Support levels: 1.2203, 1.2150, 1.2114, 1.2063, 1.1907, 1.1803
• Resistance levels: 1.2294

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price reached the daily resistance level. 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 1.2203, but only with confirmation. Sell trades can be considered from the resistance level of 1.2294, 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.

The USD/JPY currency pair

• Prev Open: 133.25
• Prev Close: 131.60
• % chg. over the last day: -1.25%

The Japanese yen is strengthening amid a decline in US yields. The dollar also declined, falling to its lowest level in two months. Nervousness over an upcoming visit to Taiwan by US House Speaker Nancy Pelosi also led to an influx of capital into the yen and put pressure on other Asian currencies. However, it should not be noted that the difference between the US and Japanese interest rates is not in favor of the Japanese yen, so at any time, upward movement on the currency pair USD/JPY may resume.

• Support levels: 130.85
• Resistance levels: 131.37, 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 is in the negative zone, 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 130.85, but with additional confirmation. Resistance levels of 131.37 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.

The USD/CAD currency pair

• Prev Open: 1.2808
• Prev Close: 1.2837
• % chg. over the last day: +0.22%

Oil decreased by almost 5% due to negative Chinese data. China is the world’s largest importer of crude oil, while the Canadian dollar is a commodity currency and depends on oil prices. Falling oil prices are weakening the Canadian dollar. It also should be noted that the Central Banks of the US and Canada keep their interest rates at the same level (2.5%), so there is no significant imbalance in this currency pair to form a long-term trend. At the same time, employment growth in Canada could affect the USD/CAD exchange rate as the Bank of Canada (BoC) wants to accelerate the path to higher interest rates. An improvement in the labor market could lead to a more aggressive rate hike.

• Support levels: 1.2786
• 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. At the moment, the price is forming a wide balance. 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 1.2786 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.

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.