InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0733
• Prev Close: 1.0652
• % chg. over the last day: -0.76%

The ISM Manufacturing PMI and hawkish speeches from the Fed yesterday were optimistic for the US dollar. The ISM Manufacturing PMI for May in the US was 56.1 versus expectations of 54.5 and April’s value of 55.4. The report states that supply chain and pricing issues remain major problems negatively impacting businesses. The Business Activity Index in Europe remained about the same, with the unemployment rate unchanged.

• Support levels: 1.0643, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0702, 1.0756, 1.0786, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. But the MACD indicator is in the negative zone, and the price is close to the priority change level. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0643 or 1.0611, but only with confirmation and short targets. Sell trades can be considered from the resistance level of 1.0702, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US FOMC Member Mester Speaks at 20:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2599
• Prev Close: 1.2484
• % chg. over the last day: -0.92%

The short-term interest rate markets assess the probability of a 25 basis point hike on June 16 with a 100% probability. The Bank of England may have to raise rates again in the future but will likely pause to reassess and see where the UK economy stands. The UK Manufacturing PMI index has remained at the same level. Thus, the attitude to the pound sterling is now shifting to the bearish side.

• Support levels: 1.2471, 1.2437, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2558, 1.2628, 1.2669, 1.2698, 1.2770

On the hourly time frame, the GBP/USD currency pair trend is bullish. But the MACD indicator became negative, and sellers’ pressure is still present. The price is trading below the moving averages but above the priority change level. Under such market conditions, buy deals may be considered from the support level of 1.2471 or 1.2437, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2558, but with confirmation.

Alternative scenario: if the price breaks down through the 1.2437 support level and fixes below, the mid-term downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 128.61
• Prev Close: 130.15
• % chg. over the last day: +1.20%

Bank of Japan official Adachi said yesterday that the yen is not a monetary policy target, and it is too early to tighten monetary policy. The fundamental picture for the USD/JPY currency pair remains the same. The Fed is tightening monetary policy, while the Bank of Japan, on the contrary, holds a soft policy, and nothing will change in the near future. As a rule, monetary tightening leads to a strengthening of the national currency, while easing, on the contrary, leads to depreciation. As a result, the USD/JPY quotes tend to grow mid-term.

• Support levels: 129.44, 128.76, 128.10, 127.64, 127.24, 127.04
• Resistance levels: 130.06, 130.99

The medium-term trend on the USD/JPY currency is bullish. The price is steadily growing, and the MACD indicator is in the positive zone, but it is overbought. Buy trades can be considered after a small pullback, as the price has strongly deviated from the moving averages. The support level of 129.44 or 128.76 should be considered first, but with confirmation. A resistance level of 130.06 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 127.64, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2640
• Prev Close: 1.2656
• % chg. over the last day: +0.13%

The Bank of Canada took another aggressive step in its rate hike cycle, raising the overnight interest rate by 50 basis points for the second time in a row and warning that it could use even more “strong measures” to fight inflation if necessary. The minutes also say Russia’s invasion of Ukraine, China’s isolation from COVID, and ongoing supply disruptions put pressure on activity and rising inflation. The war has heightened uncertainty and puts further upward pressure on energy and agricultural commodity prices.

• Support levels: 1.2608, 1.2566, 1.2510
• Resistance levels: 1.2676, 1.2728, 1.2765, 1.2807, 1.2893, 1.2953, 1.3000, 1.3052

The USD/CAD currency pair is bearish in terms of technical analysis, but the price began to acquire a more flat structure. The MACD indicator has become positive, and the buyer’s pressure is slowly increasing. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2608 or after the breakout of the 1.2676 resistance level. For sell deals, it is better to consider the resistance level of 1.2728 or 1.2765, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2893, the uptrend will likely resume.

• – OPEC+ Meeting at 13:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0774
• Prev Close: 1.0731
• % chg. over the last day: -0.40%

Consumer prices in Europe broke another record. Inflation in the Eurozone accelerated from 7.4% to 8.1% y/y. The main reason for the increase was high energy prices, which affected 2⁄3 of overall inflation. Core inflation (which excludes food and fuel prices) rose from 3.5% to 3.8%. The price increase is becoming more common, adding to the pressure on the ECB. Analysts expect inflation to remain high until the end of 2022, so risks are shifting towards higher interest rates. With a high probability, the ECB will raise the rate by 25 basis points at the July meeting and by 50 bps at the September meeting.

• Support levels: 1.0643, 1.0680, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0756, 1.0786, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. But the MACD indicator became negative, and a correction began. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0643, but only with confirmation and short targets. Sell trades can be considered from the resistance level of 1.0756, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

• – Eurozone German Retail Sales (m/m) at 09:00 (GMT+3);
• – Eurozone Spanish Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – Eurozone Italian Manufacturing PMI (m/m) at 10:45 (GMT+3);
• – Eurozone French Manufacturing PMI (m/m) at 10:50 (GMT+3);
• – Eurozone German Manufacturing PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 14:00 (GMT+3);
• – Canada Manufacturing PMI (m/m) at 15:30 (GMT+3);
• – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3);
• – US JOLTs Job Openings (m/m) at 17:00 (GMT+3);
• – US FOMC Member Williams Speaks at 18:30 (GMT+3);
• – US FOMC Member Bullard Speaks at 20:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2650
• Prev Close: 1.2601
• % chg. over the last day: -0.39%

The UK economy contracted by 0.1% in March, and economists expect further contraction this year as the country’s cost-of-living crisis deepens. The pound sterling is in danger of becoming an “emerging market” currency, according to Bank of America, as falling growth and rising risks are forcing investors to abandon the British currency. According to analysts, the preferred way to capitalize on the fall of the pound is the appreciation of the euro against the pound sterling.

• Support levels: 1.2515, 1.2437, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2628, 1.2669, 1.2698, 1.2770

The GBP/USD currency pair trend is bullish on the hourly time frame. Nevertheless, the MACD indicator became negative, and correction started. The price is trading between the moving averages. Under such market conditions, buy deals may be considered from the support level of 1.2515, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2628, but with confirmation.

Alternative scenario: if the price breaks down through the 1.2437 support level and fixes below, the mid-term downtrend will likely resume.

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

The USD/JPY currency pair

• Prev Open: 127.53
• Prev Close: 128.69
• % chg. over the last day: +0.90%

The fundamental picture for the USD/JPY currency pair remains the same. The Fed is tightening monetary policy, while the Bank of Japan, on the contrary, holds a soft policy, and nothing will change soon. As a rule, monetary tightening leads to a strengthening of the national currency, while easing, on the contrary, leads to depreciation. The Manufacturing PMI index has remained almost unchanged compared to the previous month. The index is above the level of 50, which indicates stability.

• Support levels: 128.76, 128.46, 128.10, 127.64, 127.24, 127.04
• Resistance levels: 129.32, 130.06, 130.99

The medium-term trend on the USD/JPY currency has changed to bullish. The price has changed its market structure, the MACD indicator has become positive, and the price has consolidated above the moving averages. Buy trades can be considered from the support level of 128.76 or 127.46, but with confirmation. For sell deals, resistance level of 128.32 may be considered, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 127.24, the downtrend will likely resume.

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

The USD/CAD currency pair

• Prev Open: 1.2656
• Prev Close: 1.2650
• % chg. over the last day: -0.05%

Oil is getting cheaper as OPEC+ is considering excluding Russia from the group’s production. The Canadian dollar is a commodity currency, so lower oil prices make it weak. The dollar index strengthened yesterday, which caused the USD/CAD quotes to rise. In the medium term, both the dollar index and the Canadian dollar tend to increase as the Central Banks of both countries hold a tightening policy. The Bank of Canada will hold its next interest rate meeting today, where analysts are predicting to see a 0.5% rate hike.

• Support levels: 1.2652, 1.2608, 1.2566, 1.2510
• Resistance levels: 1.2728, 1.2765, 1.2807, 1.2893, 1.2953, 1.3000, 1.3052

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator is in the negative zone, but the buyers’ pressure is slowly increasing. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2652, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2728, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2893, the uptrend will likely resume.

• – Canada Manufacturing PMI (m/m) at 15:30 (GMT+3);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+3);
• – Canada BoC Statement at 17:00 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0734
• Prev Close: 1.0779
• % chg. over the last day: +0.42%

Consumer prices in European countries are increasing again. Spain’s annual inflation rate jumped from 8.3% to 8.7%, while Germany’s inflation rate rose from 7.4% to 7.9% (y/y). France and Italy will release their data today, and then the total CPI data for the Eurozone will be updated. Analysts expect inflation in Europe to rise from 7.5% to 7.8% (y/y). If the actual data turns out to be worse than expected, the euro may see a new momentum, as the ECB will have to tighten its monetary policy more aggressively. Conversely, if the fact will be better than the forecast, the euro may decline.

• Support levels: 1.0719, 1.0643, 1.0680, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0764, 1.0786, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The MACD indicator has become inactive, but the divergence is still present, indicating that it is getting harder for the price to move up. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0719, but only with confirmation and short targets. Sell trades can be considered from the resistance level of 1.0764 but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

• – Eurozone French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Eurozone French GDP (q/q) at 09:45 (GMT+3);
• – Eurozone German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone EU Leaders Summit at 13:00 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2606
• Prev Close: 1.2647
• % chg. over the last day: +0.33%

Forecasts for the UK economy until the end of the year are disappointing. Analysts see a decline in almost all economic indicators. The strengthening of the British currency in recent days has more to do with the strengthening of the dollar index than with the fundamental support of the pound.

• Support levels: 1.2515, 1.2437, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2640, 1.2669, 1.2698, 1.2770

On the hourly time frame, the GBP/USD currency pair trend is bullish. But the MACD indicator has become negative, while the divergence is still present, which indicates the weakness of the buyers. Under such market conditions, buy deals may be considered from the support level of 1.2515, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2640, but with confirmation.

Alternative scenario: if the price breaks down through the 1.2437 support level and fixes below, the mid-term downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 126.97
• Prev Close: 127.60
• % chg. over the last day: +0.50%

The fundamental picture for the USD/JPY currency pair remains the same. The Fed is tightening monetary policy, while the Bank of Japan, on the contrary, holds a soft policy, and nothing will change in the near future. As a rule, monetary tightening leads to a strengthening of the national currency, while easing, on the contrary, leads to depreciation. As a result, USD/JPY quotes tend to grow in the medium term. Japan’s unemployment rate fell from 2.6% to 2.5%, while industrial production has unexpectedly decreased by 1.3% over the past month.

• Support levels: 127.78, 127.64, 127.24, 127.04
• Resistance levels: 128.29, 128.73, 129.07, 130.12, 130.99

The medium-term trend on the USD/JPY currency is close to changing to bullish. Buyers began to show initiative, the MACD indicator became positive and the price consolidated above the moving averages. Buy trades can be considered from the support level of 127.78 or 127.64, but with confirmation. For sell deals, resistance level of 128.29 may be considered, but only with additional confirmation.

Alternative scenario: If the price fixes above 128.29, the uptrend will likely resume.

• – Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2725
• Prev Close: 1.2654
• % chg. over the last day: -0.56%

EU leaders have agreed that the latest package of sanctions against Russia will include a partial oil embargo. The sanctions prohibit the purchase of crude oil and oil products from Russia delivered to other states by sea, but make a temporary exception for pipeline oil. Due to the backdrop of growing demand in the US and reduced blockages in China, with limited supply, oil prices began to rise as expected. The Canadian dollar is a commodity currency, so rising oil prices strengthen the Canadian currency, even as the dollar index rises.

• Support levels: 1.2652, 1.2608, 1.2566, 1.2510
• Resistance levels: 1.2728, 1.2765, 1.2807, 1.2893, 1.2953, 1.3000, 1.3052

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator is in the negative zone, but sellers’ pressure is slowly decreasing because of the divergence growth. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2652 or 1.2608, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2728, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2893, the uptrend will likely resume.

• – Canada GDP (q/q) at 15:30 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0714
• Prev Close: 1.0734
• % chg. over the last day: +0.19%

The University of Michigan’s Sentiment Index fell to 58.4 in May from 65.2 in April, its lowest value since August 2011. The Core PCE index, part of the Fed’s inflation measure, was 4.9% y/y for April versus 5.2% y/y in March. It is the first index decline in 17 months. If taken in context with other measures of inflation, it could indicate that US inflation has stopped rising. This is a good sign that the Fed may not need to tighten monetary policy after the summer meetings.

• Support levels: 1.0724, 1.0643, 1.0680, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0759, 1.0799, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The MACD indicator is positive again, but the divergence increased, which suggests it is getting harder for the price to move higher. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0724, but only with confirmation. Sell trades can be considered from the resistance level of 1.0759 but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

• – Eurozone Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – Eurozone EU Leaders Summit at 13:00 (GMT+3);
• – Eurozone Germany Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US FOMC Member Waller Speaks at 18:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2582
• Prev Close: 1.2625
• % chg. over the last day: +0.34%

Hedge fund analysts forecast five interest rate hikes of 25 basis points by December from the Bank of England. On the other hand, forward prices reflect a gloomy long-term outlook, showing that the Bank of England will eventually cut rates in two years. There is a high probability that the UK economy will fall into recession in the next 12 months.

• Support levels: 1.2635, 1.2512, 1.2437, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2669, 1.2698, 1.2770

The GBP/USD currency pair trend is bullish on the hourly time frame. The MACD indicator is positive, but the divergence is getting stronger, which indicates the weakness of the buyers. Under such market conditions, buy deals may be considered from the support level of 1.2635, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2669 or 1.2698, but with confirmation in the form of sellers’ initiative.

Alternative scenario: if the price breaks down through the 1.2437 support level and fixes below, the mid-term downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 127.13
• Prev Close: 127.10
• % chg. over the last day: -0.02%

Bank of Japan Governor Kuroda reiterated that the central bank should continue easing monetary policy to help the economy recover from the recession caused by the pandemic. Kuroda also pointed out that the yen depreciation was not only due to the Bank of Japan’s easing but also to other factors, such as rising import prices. The fundamental picture for the USD/JPY currency pair remains the same. The Fed is tightening monetary policy, while the Bank of Japan is pursuing a soft policy. As a result, USD/JPY quotes are inclined to grow in the medium term.

• Support levels: 126.25, 125.47
• Resistance levels: 127.81, 128.29, 128.73, 129.07, 130.12, 130.99

The medium-term trend on the USD/JPY currency is bearish. The MACD indicator has become inactive, sellers’ pressure has reduced, but buyers do not show initiative. Buy trades can be considered from the support level of 126.25, but with confirmation. For sell deals, resistance level 127.81 may be considered, but only with additional confirmation.

Alternative scenario: If the price fixes above 128.73, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2769
• Prev Close: 1.2719
• % chg. over the last day: -0.39%

Despite the unfavorable market sentiment, the Canadian dollar is performing much better than other currencies this year. The Central Bank of Canada is expected to raise rates by at least 50 basis points (bps) this week. But then, the Bank of Canada is also likely to pause, as Canada’s economic indicators are not showing recessionary sentiment. In the absence of new hawkish rhetoric, the interest rate hike path may soften a bit over the long term, putting pressure on the Canadian dollar (rising USD/CAD quotes).

• Support levels: 1.2692, 1.2644, 1.2607, 1.2521
• Resistance levels: 1.2728, 1.2765, 1.2807, 1.2893, 1.2953, 1.3000, 1.3052

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator has become bearish, but the sellers’ pressure is slowly decreasing due to the growth of divergence. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2692, but only with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2728, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2893, the uptrend will likely resume.