InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0564
• Prev Close: 1.0520
• % chg. over the last day: -0.42%

German and French PMI data showed that the Eurozone economy is starting to show signs of a slowdown. In Germany, the manufacturing PMI decreased from 54.8 to 52 while the services PMI dropped from 55 to 52.4. In France, the manufacturing PMI decreased from 58.3 to 54.4, and the services PMI declined from 54.6 to 51. Typically, a PMI falling below 50 is a sign of recession in which the central bank raises interest rates. At that time, Fed spokesman Kazimir said yesterday that some Eurozone countries might face a short-term recession.

• Support levels: 1.0408, 1.0379
• Resistance levels: 1.0555, 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 forms a wide corridor, and the MACD indicator has become inactive. Under such market conditions, sell deals can be considered from the resistance level of 1.0555 or the upper border of the flat, but only after the additional confirmation. A price move above 1.0611 will change the priority. Buy trades are best to look for on intraday time frames from the support level of 1.0408 or the lower border of the flat, 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 German Ifo Business Climate Index (m/m) at 11:00 (GMT+3);
• – Eurozone EU Leaders Summit at 13:00 (GMT+3);
• – US FOMC Bullard Speaks at 14:30 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2263
• Prev Close: 1.2260
• % chg. over the last day: -0.02%

The UK Manufacturing PMI declined last month from 54.6 to 53.4, while the service sector remained at 53.4. Despite all the media talk about the dire state of the UK economy, the PMI shows that business activity in the UK is higher than in the Eurozone.

• Support levels: 1.2238, 1.2093, 1.1974
• Resistance levels: 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 situation is very similar to the euro. The price forms a wide corridor, while the MACD indicator shows no activity. Under such market conditions, sell deals can be considered from the resistance level of 1.2422 or the upper border of the flat, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2238 or the lower border of the flat, 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.

• – UK Retail Sales (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 136.21
• Prev Close: 134.96
• % chg. over the last day: -0.93%

The nationwide core Consumer Price Index was 2.1% for the second month in a row and again exceeded the Bank of Japan’s target level. This data challenges the Bank of Japan’s view that the recent price increase is temporary and does not require a withdrawal of monetary stimulus. Such sentiment provided a brief boost to the Japanese yen. But with wage growth slowing, many analysts expect the Bank of Japan to remain on a soft monetary policy rather than fighting inflation by raising interest rates.

• Support levels: 134.10, 133.35, 131.67, 131.00, 130.12, 129.48, 128.76
• Resistance levels: 135.23, 135.77, 136.66

The medium-term trend on the USD/JPY currency pair is bullish, but the price corrected today to the moving average lines and canceled the final balance. This is a sign of buyers’ weakness. The MACD indicator is in the negative zone. Under such market conditions, buy trades can be considered from the support level of 134.10 or 133.35, but with confirmation. A resistance level of 135.23 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 133.35, the downtrend will likely resume.

• – Japan National Core Consumer Price Index at 02:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2945
• Prev Close: 1.2995
• % chg. over the last day: +0.39%

The Canadian dollar is a commodity currency, so it depends not only on the USD index dynamics but also on the oil quotes. The dollar index yesterday strengthened after the speech of Jerome Powell in front of Congress, while oil quotes went down. As a result, the Canadian dollar lost some ground. But worth noting that the Bank of Canada is on its way to raising interest rates, and the latest inflation data in Canada showed that inflation is not stopping. Therefore, on expectations of an aggressive rate hike at the next meeting, the Canadian dollar may get a boost soon.

• Support levels: 1.2966, 1.2893, 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.3068

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator has become positive, and the buyers are showing their strength again. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2966. For sell deals, it is better to consider the resistance level of 1.3068, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2815 support level, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0531
• Prev Close: 1.0568
• % chg. over the last day: +0.35%

On Wednesday, the dollar fell as US Treasury yields drop amid fears the US economy could slide into recession. It happened after Federal Reserve Chairman Jerome Powell said raising interest rates could lead to an economic slowdown. Investors fear that aggressive interest rate hikes by major central banks to curb inflation could lead to a global slowdown or recession. Higher rates have strengthened the dollar, but the euro has been rising recently thanks to plans by the European Central Bank to raise rates to curb inflation as well.

• Support levels: 1.0531, 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. But the pressure of buyers is increasing, the MACD indicator has become positive, and the price is close to changing the trend. Under such market conditions, sell deals can be considered from the resistance level of 1.0611, but only after the additional confirmation. A price move above 1.0611 will change the priority. Buy trades are best to look for on intraday time frames from the support level of 1.0531, 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 French Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – Eurozone French Services PMI (m/m) at 10:15 (GMT+3);
• – Eurozone German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Eurozone German Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone ECB Economic Bulletin at 11:00 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – Eurozone EU Leaders Summit at 13:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3);
• – US Fed Chair Powell Testifies at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2263
• Prev Close: 1.2262
• % chg. over the last day: -0.01%

The UK Consumer Price Index was 9.1% in annual terms (forecast 9.1%, previous 9.0%). Monthly inflation rose by 0.7%. The last time this level of inflation was in 1982. Residential services, primarily electricity, gas and other fuels, and transportation contributed the most to the rise in inflation. To summarize, rising food and energy prices continue to exacerbate the country’s cost-of-living crisis. The main bank rate is now at a 13-year high of 1.25%, and the Bank of England expects inflation to exceed 11% by October. Analysts believe the central bank will be forced to take stricter measures at its upcoming meetings.

• Support levels: 1.2222, 1.2093, 1.1974
• Resistance levels: 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 price has corrected to the average values, the MACD indicator has become inactive, and a sideways trend is forming. Under such market conditions, sell deals can be considered from the resistance level of 1.2422, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2222, 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.

• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 136.58
• Prev Close: 136.22
• % chg. over the last day: -0.26%

The Bank of Japan is forced to take increasingly tough action to maintain its yield curve control strategy as other central banks, such as the Fed, continue raising interest rates. Consequently, selling pressure on the yen increases as foreign rates rise. But analysts are confident that it will become increasingly challenging to keep policy soft going forward. Japan imports most of its energy from abroad, so the country’s trade surplus has recently turned into a trade deficit as oil prices skyrocket. And tourists are still unable to visit the island, further depressing demand for the yen. Therefore, the Bank of Japan will be forced to capitulate and raise this ceiling entirely or remove yield controls.

• Support levels: 135.12, 133.35, 131.67, 131.00, 130.12, 129.48, 128.76
• Resistance levels: 135.77, 136.66

The medium-term trend on the USD/JPY currency pair is bullish. The price has corrected to the moving averages. Under such market conditions, buy trades can be considered from the support level of 135.12, but with confirmation. A resistance level of 135.77 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 133.35, the downtrend will likely resume.

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

The USD/CAD currency pair

• Prev Open: 1.2921
• Prev Close: 1.2946
• % chg. over the last day: +0.19%

The Consumer Price Index in Canada increased by 1.4% last month (forecast +1%, previous +0.6%). Thus, inflation in Canada reached 7.7% annually, which is a record since 1983. Core inflation (which excludes food and fuel prices) rose from 5.8% to 6.3% year on year. Analysts believe the sharp rise in inflation in Canada will boost investor expectations for a more aggressive interest rate hike by the Bank of Canada, which in turn will add confidence to the Canadian dollar. The Bank of Canada may go for a 75 bps hike as early as the next meeting.

• Support levels: 1.2920, 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2980, 1.3068

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator has become inactive, the price has corrected to its average values, and a sideways trend is forming. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2920. For sell deals, it is better to consider the resistance level of 1.2980, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2815 support level, the downtrend will likely resume.

• – US Crude Oil Reserves (w/w) at 18:30 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0506
• Prev Close: 1.0534
• % chg. over the last day: +0.27%

The European currency increased yesterday after European Central Bank Chief Economist Philip Lane confirmed that the ECB would raise interest rates by 25 basis points at its July meeting. Still, the size of its September hike has yet to be determined, suggesting that a larger increase of 50 basis points is also a realistic option.

• Support levels: 1.0499, 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 has become inactive, and a sideways trend is forming. Under such market conditions, sell deals can be considered from the resistance level of 1.0611, but only after the additional confirmation. A price move above 1.0611 will change the priority. Buy trades are best to look for on intraday time frames from the support level of 1.0499, 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.

• – US Fed Chair Powell Testifies at 16:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2245
• Prev Close: 1.2279
• % chg. over the last day: +0.28%

On Tuesday, Bank of England Chief Economist Hugh Pill said that the central bank would soon need to raise interest rates to deal with rising inflation.New inflation data will be released in the UK today. Economists forecast that the consumer price index will reach an annualized rate of 9.1% (the current value is 9.0%). If the data is worse than expected, the British pound may gain further momentum amid expectations of more aggressive action by the Bank of England to suppress inflation.

• Support levels: 1.2176, 1.2093, 1.1974
• Resistance levels: 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 price has corrected to the average values, the MACD indicator has become inactive, and a sideways trend is forming. Under such market conditions, sell deals can be considered from the resistance level of 1.2422, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.2176, 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.

• – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
• – UK Producer Price Index (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 135.00
• Prev Close: 136.65
• % chg. over the last day: +1.22%

On Tuesday, the Japanese yen fell against the US dollar to its lowest level since October 1998, as the ultra-soft monetary policy of the Bank of Japan stands in stark contrast to the aggressive Federal Reserve. The meeting between Japan’s central bank governor Kuroda and Prime Minister Kishida did not result in any action to strengthen the yen.

• Support levels: 135.54, 133.35, 131.67, 131.00, 130.12, 129.48, 128.76
• Resistance levels: 136.66

The medium-term trend on the USD/JPY currency pair is bullish. The price continues to rise steadily. It is best to wait for a slight pullback to join the trend. Under such market conditions, buy trades can be considered from the support level of 135.54, but with confirmation. A resistance level of 136.66 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 133.35, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2980
• Prev Close: 1.2917
• % chg. over the last day: +0.49%

Retail sales rose 0.9% to $60.7 billion in April. Sales increased in 6 of 11 subsectors. This is a sign that the Canadian economy is in good shape and shows no signs of slowing down, unlike the US figures. Canada will also release consumer price data today. Economists are predicting inflation to rise another 1%, to 7.78% in annual terms. The current inflation rate is 6.78%. It should be noted that Canada’s central bank is on its way to tightening interest rates. Therefore, a sharp rise in inflation figures may give confidence to the Canadian dollar on the back of more aggressive monetary policy tightening.

• Support levels: 1.2925, 1.2815, 1.2709, 1.2618, 1.2578, 1.2510
• Resistance levels: 1.2974, 1.3068

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator has become inactive,and the price has corrected to its average values but has broken through the downtrend line. Under such market conditions, it is better to look for buy deals in the lower time frames from the support level of 1.2925. For sell deals, it is better to consider the resistance level of 1.2974, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2815 support level, the downtrend will likely resume.

• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3).