InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0444
• Prev Close: 1.0552
• % chg. over the last day: +1.03%

Yesterday, European Central Bank President Christine Lagarde informed Eurozone finance ministers of the ECB’s plans to cap bond spreads. The new mechanism, which Central Bank officials are developing, is designed to prevent pressure from irrational market movements on individual European countries as the ECB embarks on its first interest rate hike. The euro jumped by 1% on this news.

• Support levels: 1.0473, 1.0408, 1.0379
• Resistance levels: 1.0611, 1.0680, 1.0723

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price has corrected to the average values, the MACD indicator became positive, and the buyers’ pressure is still there. Under such market conditions, sell deals can be considered from the resistance level 1.0611, but only after the additional confirmation. A price move above 1.0611 is not desirable for the sellers. Buy trades are best to look for on intraday time frames from the support level of 1.0473, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0611 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone Consumer Price Index (m/m) at 10:30 (GMT+3);
• – US Fed Chair Powell Speaks at 15:45 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2175
• Prev Close: 1.2352
• % chg. over the last day: +1.45%

The British pound rose sharply after the Bank of England implemented its fifth consecutive interest rate hike on Thursday to curb soaring inflation. The Monetary Policy Committee voted 6-3 to raise the bank rate by 25 basis points to 1.25%, with three dissenting members voting to raise it by 50 basis points to 1.5%. The committee also stated that it would take whatever action is necessary to bring inflation back to the 2% target over the medium term in a sustainable manner.

• Support levels: 1.2199, 1.1974
• Resistance levels: 1.2363, 1.2422, 1.2470, 1.2523, 1.2629

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. But an initiative of buyers appeared. The MACD indicator became positive, and the price reached the priority change level. Under such market conditions, sell deals can be considered from the resistance level of 1.2363, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2199, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2363 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 133.81
• Prev Close: 132.21
• % chg. over the last day: -1.21%

The Bank of Japan kept interest rates ultra-low on Friday and its guidance to keep borrowing costs at “current or lower” levels, signaling its determination to focus on supporting economic recovery after the COVID-19 pandemic. In a sign that the recent sharp drop in the yen could impact the economy, the Central Bank said it would keep a close eye on how changes in the exchange rate could affect the economy. The growing divergence in monetary policy between Japan and the rest of the world has caused the yen to fall to a 24-year low.

• Support levels: 133.05, 131.67, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64
• Resistance levels: 134.21, 135.16

The medium-term trend on the USD/JPY currency pair is bullish. The price fell sharply yesterday to the priority change level. Still, buyers managed to hold their positions, and news about the Bank of Japan keeping its soft monetary policy led to new bullish momentum. Under such market conditions, buy trades can be considered from the support level of 133.05, but with confirmation. A resistance level of 134.21 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.

Alternative scenario: If the price fixes below 131.67, the downtrend will likely resume.

• – Japan BoJ Interest Rate Decision at 06:00 (GMT+3);
• – Japan BoJ Monetary Policy Statement at 06:00 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2887
• Prev Close: 1.2945
• % chg. over the last day: +0.45%

Finance Minister Chrystia Freeland on Thursday expressed confidence in the Bank of Canada’s ability to curb rising inflation and prevent prices from taking hold but said there is no guarantee the economy will avoid a recession. To contain price increases, the Bank of Canada raised its benchmark interest rate by half a percentage point to 1.5% this month, the second increase in a row, and said it could act more decisively if necessary.

• Support levels: 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2970, 1.3051

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price forms a flat structure. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2815. For sell deals, it is better to consider the resistance level of 1.2970, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2709 support level, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0408
• Prev Close: 1.0447
• % chg. over the last day: +0.37%

The Federal Reserve raised its target interest rate by three-quarters of a percentage point and expected the economy to slow and US unemployment to rise in the coming months. Earlier economic data on Wednesday showed that US retail sales unexpectedly fell by 0.3% in May, the first decline in 5 months. As a result, the dollar index fell sharply, sending the EURUSD currency pair higher. In her speech yesterday, ECB head Christine Lagarde hinted that the ECB needs to be consistent in its policy, not aggressive. Traders likely should not expect the ECB to raise its rate by 0.5% in July aggressively. France’s inflation rate increased by 0.7% in May to 5.2% y/y.

• Support levels: 1.0408, 1.0379
• Resistance levels: 1.0503, 1.0570, 1.0611, 1.0680

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is clearly forming a flat structure. The MACD indicator has become inactive. Under such market conditions, sell deals can be considered from the resistance level 1.0503 or 1.0570, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0408, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0570 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone Italian Consumer Price Index (m/m) at 11:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1993
• Prev Close: 1.2172
• % chg. over the last day: +1.49%

The Bank of England will hold its monetary policy meeting today. The Bank of England is expected to raise interest rates for the fifth time to suppress inflationary growth amid slowing growth and a weakening currency. Some market participants call for the Monetary Policy Committee to implement a 50 basis point hike, but analysts are leaning more toward a 25 basis point move. The Organization for Economic Cooperation and Development predicts that Britain will be the weakest G-7 next year as higher interest rates, taxes, shrinking trade, and soaring food and energy prices will weigh on households.

• Support levels: 1.2104, 1.1974
• Resistance levels: 1.2199, 1.2265, 1.2363, 1.2422, 1.2470, 1.2523, 1.2629

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. But an initiative of buyers appeared. The MACD indicator has become positive, and the price has corrected to the average values. Under such market conditions, sell deals can be considered from the resistance level of 1.2199, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2104, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2363 resistance level and fixes above, the uptrend will likely resume.

• – UK BoE Interest Rate Decision at 14:00 (GMT+3);
• – UK BoE Monetary Policy Statement at 14:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 135.45
• Prev Close: 133.82
• % chg. over the last day: -1.44%

After the Fed meeting yesterday, investors are now turning their attention to the Bank of Japan, which has increased its bond purchases this week in an attempt to limit the rise in yields. The Central Bank is expected to stick to all of its key policy parameters when it concludes its meeting on Friday. In this case, the Bank of Japan risks putting more pressure on yields, accelerating the yen’s fall and increasing public concern over rising prices.

• Support levels: 133.50, 132.85, 132.00, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64
• Resistance levels: 135.16

The medium-term trend on the USD/JPY currency pair is bullish. The price started to form a wide range, and the MACD indicator became negative. It is best to wait for a slight correction, as the price strongly deviates from the average values. Buy trades can be considered from the support level of 132.85, but with confirmation. A resistance level of 135.16 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.

Alternative scenario: If the price fixes below 132.00, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2928
• Prev Close: 1.2891
• % chg. over the last day: -0.28%

The Canadian dollar rose sharply yesterday amid a decline in the dollar index, which led to a decline in the USD/CAD quotes. The sharp decline in oil prices did not significantly impact the Canadian currency. The fundamental picture now is that both the US Fed and the Bank of Canada are on the way to raising the interest rates, so the confidence in this currency pair will often shift from one currency to the other.

• Support levels: 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2917, 1.2991

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price reached the resistance level and started to correct. The MACD indicator became negative, and sellers were slightly pressured. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2815. For sell deals, it is better to consider the resistance level of 1.2917, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2709 support level, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0406
• Prev Close: 1.0417
• % chg. over the last day: +0.10%

Germany’s inflation rate increased by 0.9% last month to 7.9% annually (the highest level since 1973). The main reason for the high inflation is still rising energy prices. At the same time, the ZEW economic sentiment indicator for Germany rose over the past month. The report indicates that financial market experts are less pessimistic about the economy. However, the economy is still exposed to numerous risks, such as the effects of sanctions against Russia, the unclear pandemic situation in China, and the gradual change in the ECB’s monetary policy. The report also indicates that inflation expectations in the Eurozone have declined again. Still, ECB officials clearly state that rising inflation across the EU is of great concern to policymakers.

• Support levels: 1.0379
• Resistance levels: 1.0509, 1.0563, 1.0611, 1.0680

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. There are signs that the fall has slowed down and turned into a flat structure. The MACD indicator is in the negative zone but without any signs of sellers’ pressure. Under such market conditions, it is better to wait for a small pullback, as the price has strongly deviated from the averages. Sell deals can be considered from the resistance level 1.0509 or 1.0563, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0379, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0680 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – US Retail Sales (m/m) at 15:30 (GMT+3);
• – US Empire State Manufacturing Index (m/m) at 15:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 19:20 (GMT+3);
• – US Fed Interest Rate Decision at 21:00 (GMT+3);
• – US FOMC Monetary Policy Statement at 21:00 (GMT+3);
• – US FOMC Economic Projection at 21:00 (GMT+3);
• – US FOMC Press Conference at 21:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2131
• Prev Close: 1.1997
• % chg. over the last day: -1.11%

The UK-US government bond yield spread is renewing multi-year lows, signaling the continuation of this currency pair’s downtrend. At the same time, tighter monetary policy from the US Federal Reserve strengthens the dollar index, which is negative for the British currency. Economic indicators also are not encouraging. The British unemployment rate increased from 3.7% to 3.8% last month.

• Support levels: 1.1974
• Resistance levels: 1.2127, 1.2199, 1.2265, 1.2363, 1.2422, 1.2470, 1.2523, 1.2629

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 with signs of oversold and divergence. Under such market conditions, it is better to wait for a small pullback, as the price has strongly deviated from the averages. Sell deals can be considered from the resistance level of 1.2127, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1974, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2422 resistance level and fixes above, the uptrend will likely resume.

• – US Fed Interest Rate Decision at 21:00 (GMT+3);
• – US FOMC Monetary Policy Statement at 21:00 (GMT+3);
• – US FOMC Economic Projection at 21:00 (GMT+3);
• – US FOMC Press Conference at 21:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 134.43
• Prev Close: 135.45
• % chg. over the last day: +0.75%

The Bank of Japan stepped up its policy defense yesterday, unveiling a new set of unscheduled purchases, including purchases with much longer maturities. These sharp moves reflect the Bank of Japan’s desire to defend its yield curve adjustment policy, even if it would cause the yen to fall further as the Federal Reserve accelerates the pace of rate hikes. Governor Haruhiko Kuroda insists that it is too early for Japan to retreat from ultra-low rates, as the economy is still recovering from the pandemic and inflation is largely driven by rising energy prices. The majority of economists surveyed expect the Bank to stick with its policy this week.

• Support levels: 132.85, 132.00, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64
• Resistance levels: 135.16

The medium-term trend on the USD/JPY currency pair is bullish. But there are signs of slowing, and divergence on the MACD indicator is already observed in several time frames. It is best to wait for a slight correction, as the price has deviated strongly from the average lines. Buy trades can be considered from the support level of 132.85, but with confirmation. A resistance level of 135.16 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.

Alternative scenario: If the price fixes below 132.00, the downtrend will likely resume.

• – US Fed Interest Rate Decision at 21:00 (GMT+3);
• – US FOMC Monetary Policy Statement at 21:00 (GMT+3);
• – US FOMC Economic Projection at 21:00 (GMT+3);
• – US FOMC Press Conference at 21:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2891
• Prev Close: 1.2954
• % chg. over the last day: +0.49%

The bets of a major interest rate hike by the Bank of Canada next month are rising rapidly amid expectations of a rate hike by the Federal Reserve. There is now an 80% probability of a 0.75% rate hike at the Canadian central bank’s July 13 meeting, bringing the interest rate to 2.25%. Last week, traders estimated a roughly 50% chance of such a hike. The growth of the dollar index provokes the growth of USD/CAD quotes even though oil prices remain at their highs.

• Support levels: 1.2881, 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2991

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is growing steadily, but there are signs of a slowdown. The MACD indicator shows overbought and there are signs of divergence. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2881. For sell deals, it is better to consider the resistance level of 1.2991, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2709 support level, the downtrend will likely resume.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – US Fed Interest Rate Decision at 21:00 (GMT+3);
• – US FOMC Monetary Policy Statement at 21:00 (GMT+3);
• – US FOMC Economic Projection at 21:00 (GMT+3);
• – US FOMC Press Conference at 21:30 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0515
• Prev Close: 1.0408
• % chg. over the last day: -1.02%

ECB member Kazimir said yesterday that he sees a clear need for a 50 basis point rate hike in September. Such hawkish rhetoric from ECB officials is very rare. This means that sentiment within the bank is driven by a more aggressive tightening of monetary policy. On the other hand, according to WSJ, Fed officials may approve a 0.75% interest rate hike this week. Such an announcement led to an even stronger US dollar.

• Support levels: 1.0379
• Resistance levels: 1.0509, 1.0563, 1.0611, 1.0680

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is steadily declining. The MACD indicator is in the negative zone with signs of oversold and divergence. Under such market conditions, it is better to wait for a small pullback, as the price has strongly deviated from the averages. Sell deals can be considered from the resistance level 1.0509 or 1.0563, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0379, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0680 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2310
• Prev Close: 1.2132
• % chg. over the last day: -1.46%

The Bank of England will hold its monetary policy meeting this week. Analysts think that the Bank of England will raise the rate by 25 basis points for the fourth time as policymakers continue to balance the risk of persistently high inflation against growth uncertainty. However, the combination of Friday’s US inflation surprise and hawkish statements from European Central Bank officials means that investors expect a 75 basis point rate hike in the next two meetings, and predict that the Bank of England rate will reach nearly 3.5% by this time next year. This is despite the fact that the Bank of England said at its last meeting in May that market expectations were exaggerated.

• Support levels: 1.2127, 1.1974
• Resistance levels: 1.2199, 1.2265, 1.2363, 1.2422, 1.2470, 1.2523, 1.2629

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 with signs of oversold and divergence. Under such market conditions, it is better to wait for a small pullback, as the price has strongly deviated from the averages. Sell deals can be considered from the resistance level of 1.2265, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2127, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2523 resistance level and fixes above, the uptrend will likely resume.

• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 134.32
• Prev Close: 134.39
• % chg. over the last day: +0.05%

The fundamental picture of the USD/JPY currency pair remains the same. The Federal Reserve is tightening the policy, while Japan is holding an accommodative monetary policy. The interest rate differential in favor of placing dollars against the yen is rising sharply. As a result, the dollar index is rising, and the Japanese yen is getting cheaper. The Japanese public is very indignant about the weakening of the yen. Since the elections to the upper house will be held in July, the government is very attentive to public concerns. As a result, yesterday, the Japanese government and the central bank issued a rare joint statement expressing concern about the yen’s sharp decline. Some investors fear either currency intervention or indecision to hold bond yields.

• Support levels: 132.00, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64
• Resistance levels: 135.16

The medium-term trend on the USD/JPY currency pair is bullish. But there are signs of slowing growth, and divergence is already observed in several timeframes. It is best to wait for a slight correction, as the price has deviated strongly from the average lines. Buy trades can be considered from the support level of 132.00, but with confirmation. A resistance level of 135.16 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.

Alternative scenario: If the price fixes below 132.00, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2780
• Prev Close: 1.2897
• % chg. over the last day: +0.92%

The USD/CAD currency pair grows for the fifth day in a row. Even a rise in oil prices on Monday could not give confidence to the Canadian currency, which is a commodity currency, as the rise in the dollar index is supported by the hawkish intentions of the Federal Reserve to raise the interest rate by 75 basis points tomorrow.

• Support levels: 1.2815, 1.2765, 1.2685, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2893, 1.2953

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is steadily growing but has reached an important resistance level now. The MACD indicator shows that it is overbought and there are signs of divergence. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2815 or 1.2765. For sell deals, it is better to consider the resistance level of 1.2893, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2578 support level, the downtrend will likely resume.