InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0037
• Prev Close: 1.0057
• % chg. over the last day: +0.20%

US inflation has beaten analysts’ expectations. The US consumer price index reached 9.1% year-on-year, compared to expectations of 8.8%. It is the highest rate since 1981. Last month’s gain was 1.3%. The Core Index (which excludes food and energy prices) reached 5.9%, with 5.7% expected. On a monthly basis, the Core CPI rose by 0.7%. European countries also saw an increase in consumer prices. Over the past month, inflation in Germany increased by 0.1%, in France by 0.7%, and in Spain by 1.5% to 10.2% on an annualized basis. Such data has hit confidence that the pace of slowing inflation in the future will be challenging. In his speech yesterday, FOMC spokesman Bostic said that a 100 basis point rate hike is also being considered by the Committee. There is a growing possibility that the ECB will also consider a 0.5% hike, although Fed Chair Christine Lagarde has argued several times that the first hike will be 0.25%.

• Support levels: 1.0000
• Resistance levels: 1.0147, 1.0221, 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 bearish. At the moment, the price is trading below the moving averages. The MACD indicator is in the negative zone, but the divergence is already observed in several timeframes. Under such market conditions, sell deals can be considered from the resistance level of 1.0147, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0000, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0284 resistance level and fixes above, the uptrend will likely resume.

• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US FOMC Member Waller Speaks at 18:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1884
• Prev Close: 1.1889
• % chg. over the last day: +0.04%

UK GDP unexpectedly showed a 0.5% growth in the last month, overlapping the decrease over the previous three months. Experts had expected a decline of 0.2%. At the same time, the Industrial Production Index had grown by 0.9% (expected -0.1%), while manufacturing production had added 1.5% (expected -0.6%). Such positive sentiment gave confidence to the pound sterling.

• Support levels: 1.1801
• Resistance levels: 1.1887, 1.2002, 1.2065, 1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The MACD indicator is in the negative zone, but there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.1887, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1801, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2137 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 136.86
• Prev Close: 137.37
• % chg. over the last day: +0.35%

The situation on the USD/JPY currency pair remains the same. The huge gap between the interest rates and diametrically opposed monetary policy has already caused USD/JPY quotes to reach multi-year highs. There were suggestions that the Bank of Japan would be forced to intervene to strengthen the currency or adjust its control of the yield curve, but no such action has been taken. Japan’s central authorities are still pushing for a weaker currency. And the situation will not change soon, so traders should not count on a price reversal based on fundamental factors.

• Support levels: 137.44, 137.12, 136.48, 135.92, 135.40, 134.64, 134.11
• Resistance levels: 138.89

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator has become positive, the buyer’s pressure has increased, and the price continues an upward trend. But there are signs of divergence. Under such market conditions, buy trades can be considered within a day from the support level of 137.44, but with confirmation. A resistance level of 138.89 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 135.93, the downtrend will likely resume.

• – Japan Industrial Production (m/m) at 07:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3019
• Prev Close: 1.2978
• % chg. over the last day: -0.31%

The Canadian dollar strengthened after the Bank of Canada raised its benchmark interest rate by a full percentage point, surprising markets with the most significant increase since 1998. The Bank of Canada said in a statement that inflation in Canada remains more resilient than the Bank expected in its April monetary policy report and is likely to stay around 8% for the next few months. The Bank expects Canada’s economy to grow 3.5% in 2022, 1.75% in 2023, and 2.5% in 2024. Economic activity is slowing as global growth slows and monetary policy tightens. The outlook for prices suggests that inflation will begin to decline later this year, dropping to about 3% by the end of next year and returning to the 2% target by the end of 2024.

• Support levels: 1.2959, 1.2934, 1.2894
• Resistance levels: 1.3001, 1.3050, 1.3113

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. But there are signs of interception of the initiative. The price is trading below the moving averages, and there is slight pressure from the sellers. Under such market conditions, it is best to look for buy trades on the lower time frames from the support level of 1.2959, but with confirmation. For sell deals, it is best to consider the resistance level of 1.3001, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2894 support level, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0036
• Prev Close: 1.0036
• % chg. over the last day: 0.00%

Germany’s ZEW economic sentiment indicator fell to -53.8 (expected -40.6, previous -28). For the Eurozone, the ZEW Index fell to 51.1 (expectation -39, previous -28). The report points out that the current serious concerns over energy supplies, the ECB interest rate hike announced, and further restrictions related to the pandemic in China have led to a significant deterioration in the economic outlook. Experts are assessing the current financial situation much more negatively than in the previous month and have lowered their unfavorable forecast for the next six months. Today the US and some European countries will publish inflation data. Analysts are predicting a further rise in consumer prices. The US consumer price index in June is expected to show an increase in inflation above the 8.6% level y/y.

• Support levels: 1.0000
• Resistance levels: 1.0185, 1.0221, 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 bearish. At the moment, the price is trading below the moving averages, and the MACD indicator is in the negative zone. Still, divergence is already observed on several timeframes. Under such market conditions, sell deals can be considered from the resistance level of 1.0185, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0000, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0364 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Eurozone Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1885
• Prev Close: 1.1885
• % chg. over the last day: 0.00%

Bank of England Governor Andrew Bailey said nothing new in his speech yesterday. The main theses are as follows: a sustained decline in inflation to the 2% target is the primary objective of the BoE with no “if” or “but.” The committee will be especially vigilant for signs of more sustained inflationary pressures and will respond strongly if necessary.

• Support levels: 1.1877, 1.1801
• Resistance levels: 1.2002, 1.2065, 1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. In contrast to the euro, the pound is showing more resilience. The MACD indicator is in the negative zone, but there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.2002, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1877 or 1.1801, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2137 resistance level and fixes above, the uptrend will likely resume.

• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 9:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 137.42
• Prev Close: 136.85
• % chg. over the last day: -0.42%

The situation on the USD/JPY currency pair remains the same. The massive gap between the interest rates and diametrically opposite monetary policy has already led to the USD/JPY quotes having reached multi-year highs. And the situation will not change soon, so traders should not count on a reversal of the price on fundamental factors.

• Support levels: 136.48, 135.92, 135.40, 134.64, 134.11
• Resistance levels: 137.12, 137.48, 138.89

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator is in the positive zone, and the price continues to trend upward. Under such market conditions, buy trades can be considered from the support level of 136.48, but with confirmation. A resistance level of 137.12 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 135.93, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2995
• Prev Close: 1.3020
• % chg. over the last day: +0.19%

The Bank of Canada will hold its monetary policy and interest rate meeting today. Analysts expect the Bank of Canada to raise the rate by 0.5%. Still, there is a possibility of a more aggressive 0.75% increase as recent Canadian economic data show signs of a slowdown, and inflation forecasts point to further growth in consumer prices. The increase should also be evaluated in conjunction with US inflation data, as the Canadian dollar is a commodity currency and depends on the dollar index and oil prices.

• Support levels: 1.2988, 1.2959, 1.2934, 1.2894
• Resistance levels: 1.3050, 1.3113

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading above the moving averages, and there is some buying pressure. Under such market conditions, it is best to look for buy trades on the lower time frames from the support level of 1.2988 or 1.2959. For sell deals, it is best to consider the resistance level of 1.3050, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2894 support level, the downtrend will likely resume.

• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+3);
• – Canada BoC Monetary Policy Report at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – Canada BoC Press Conference at 18:00 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0176
• Prev Close: 1.0040
• % chg. over the last day: -1.35%

The euro fell to $1.0005 against the US dollar, its lowest level since December 2002. The dollar index rose on expectations that the Fed will continue to aggressively raise rates, fighting rising inflation, while the energy crisis leads the Eurozone into recession. The euro could fall to $0.90 against the dollar if Russia stops supplying oil to Europe, a Bloomberg portfolio manager said last week. Today, traders’ attention will be focused on July’s ZEW economic sentiment index, which is one of the leading indicators of Europe’s economic outlook. Analysts expect Germany’s ZEW index to fall to -39 from -28. If the data is worse than expected, it might be positive for the euro as, in this case, the ECB will need to raise interest rates more decisively, which might give some impulse to the euro’s growth.

• Support levels: 1.0000
• Resistance levels: 1.0185, 1.0221, 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 bearish. At the moment, the price is trading below the moving averages. The MACD indicator is in the negative zone, but the divergence is already observed in several timeframes. Under such market conditions, sell deals can be considered from the resistance level of 1.0185, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0000, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0364 resistance level and fixes above, the uptrend will likely resume.

• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone EU Economic Forecasts, tentative.

The GBP/USD currency pair

• Prev Open: 1.2004
• Prev Close: 1.1890
• % chg. over the last day: -0.95%

On Monday, Bank of England Governor Andrew Bailey said he still believes inflation is likely to fall sharply next year. This situation is broadly in line with forecasts the British central bank presented in early May. However, Bailey said that a possible further increase in gas prices following Russia’s invasion of Ukraine or more sustained pressure on domestic costs could change the situation. The Bank of England had previously forecast that inflation would peak at just over 11% this October. Last month, the Bank of England said it was prepared to act decisively if necessary to prevent high inflation from taking root in the economy. Policymakers are assessing how much of a shock to income from high energy prices will cool inflation at the expense of lower spending on other goods and services.

• Support levels: 1.1877, 1.1801
• Resistance levels: 1.2002, 1.2065, 1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. In contrast to the euro, the pound is showing more resilience, but it is also declining against the strengthening dollar. The MACD indicator has turned negative, but there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.2002, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1877 or 1.1801, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2137 resistance level and fixes above, the uptrend will likely resume.v

• – UK BoE Gov Bailey Speaks at 20:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 136.01
• Prev Close: 137.47
• % chg. over the last day: +1.03%

Japan’s ruling coalition has expanded its majority in the upper house elections, and investors interpreted this result as a negative one for the Japanese Yen as people support the politicians who, in turn, are supporting soft monetary policy. Bank of Japan Governor Haruhiko Kuroda confirmed yesterday that he would not hesitate to add stimulus if necessary to stimulate the economy. Rising Treasury yields also provided an additional boost to the dollar, which rose against most of its major peers.

• Support levels: 137.08, 136.48, 135.92, 135.40, 134.64, 134.11
• Resistance levels: 137.48, 138.89

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish. The MACD indicator is in the positive zone, and the price continues to trend upward. Under such market conditions, buy trades can be considered from the support level of 137.08 or 136.48, but with confirmation. A resistance level of 137.48 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 135.93, the downtrend will likely resume.

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2947
• Prev Close: 1.3003
• % chg. over the last day: +0.43%

The Canadian dollar is a commodity currency, so it highly depends on on the dollar index and oil prices. Oil prices drifted yesterday while the dollar index rose, which caused the USD/CAD to grow. Traders should not forget that both the US Fed and the Bank of Canada are on the path of aggressive interest rate hikes, which creates a kind of parity between the currencies. Also, a lot depends on oil, where the situation is very uncertain. On the one hand, the supply shortage in the background of high demand in summer pushes oil prices up. On the other hand, the Fed is aggressively raising interest rates, which leads to the growth of the dollar index. Dollar-denominated commodities, including oil, are usually not in demand from overseas buyers when the US currency is rising.

• Support levels: 1.2959, 1.2934, 1.2894
• Resistance levels: 1.3018, 1.3050

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading above the moving averages, and there is buying pressure. Under such market conditions, it is best to look for buy trades on the lower time frames from the support level of 1.2959 or 1.2934. For sell deals, it is best to consider the resistance level of 1.3018, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2894 support level, the downtrend will likely resume.