The Analytical Overview of the Main Currency Pairs on 2023.05.18

The EUR/USD currency pair

• Prev Open: 1.0857
• Prev Close: 1.0838
• % chg. over the last day: -0.17 %

The latest economic data showed that the consumer price level in the Eurozone remained unchanged. Inflation in the region remained at 7.0% in annual terms. Core inflation (excluding food and energy prices) remained at 5.6%. Sustained inflationary pressures remain above the ECB's target level, so Europe's central bank has no choice but to raise rates further and conduct quantitative tightening.

• Support levels: 1.0816, 1.0711
• Resistance levels: 1.0875, 1.0904, 1.0956, 1.0995, 1.1056, 1.1075, 1.1094, 1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price reached the daily support level. The MACD indicator indicates a divergence. The downward movement remains, but the buyers have taken the initiative on the lower time frames. Under such market conditions, buy trades are best considered from the support level of 1.0816, but with confirmation in the form of buyers' initiative since the level has already been tested. Sell deals can be considered from the resistance level of 1.0904, but only with confirmation since the level has already been tested.

Alternative scenario: if the price breaks through the resistance level of 1.1000 and fixes above it, the uptrend will likely resume.

• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
• – US Existing Home Sales (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2477
• Prev Close: 1.2485
• % chg. over the last day: +0.06 %

Bank of England Governor Andrew Bailey said yesterday that the Monetary Policy Committee (MPC) would adjust the bank rate as necessary to bring inflation back to a sustainable target level over the medium term. At its May meeting, the MPC deemed it appropriate to further raise the rate by 0.25% to 4.5%. The Committee continues to believe that the risks to inflation are significantly skewed upward, so the MPC should in no way stray from the course of monetary policy, even despite the global banking system situation.

• Support levels: 1.2466, 1.2420, 1.2465, 1.2436, 1.2386, 1.2343, 1.2320
• Resistance levels: 1.2546, 1.2569, 1.2612

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. Yesterday the price tested the 1.2420 support level. The MACD indicator became inactive, within the day there is an upward momentum. The most optimal level to buy is the level of 1.2466, but only with a confirmation in the form of a bullish initiative. It is best to look for sell deals from the resistance level of 1.2546 but with a confirmation in the form of a false breakout and a reverse initiative.

Alternative scenario: if the price breaks down through the 1.2612 resistance level and fixes above it, the uptrend will likely resume.

• – UK Monetary Policy Report Hearings at 12:15 (GMT+3);

The USD/JPY currency pair

• Prev Open: 136.36
• Prev Close: 137.69
• % chg. over the last day: +0.97 %

A larger-than-expected reduction in Japan's trade deficit helped Japan's Nikkei 225 Index (JP225) extend its winning streak for the sixth consecutive session. Normally indices are inversely correlated to national currencies, and that's why the Japanese yen keeps going down against other currencies. This tendency will carry on due to the sustainability of the Japanese economy and the soft monetary policy of the Bank of Japan (BoJ).

• Support levels: 135.15, 134.67, 133.50, 133.03, 132.70, 132.02, 131.82, 130.62
• Resistance levels: 136.42, 137.26, 137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is steadily going up, breaking through the resistance levels on its way. The MACD indicator is in the positive zone, but there are the first signs of divergence. Under such market conditions, it is best to look for buy deals from the support level of 136.54 or 135.15 in case of a deeper correction. Sell trades can be considered from the resistance level of 137.91 but with confirmation in the form of a false breakout and a change in the structure on the lower time frames.

Alternative scenario: if the price fixes below the 134.67 support level, with a high probability the downtrend will resume.

• – Japan Trade Balance (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3470
• Prev Close: 1.3454
• % chg. over the last day: -0.12 %

After Canada's unexpected jump in consumer inflation on Tuesday, the odds of a 25 basis point increase at the June meeting rose to one in three, the highest level since early March. The change in the outlook followed a series of solid economic data, including an April jobs report, real estate data and a consumer sentiment indicator. Traders are betting that the Bank of Canada (BoC) will resume raising interest rates at its next meeting. A renewed rate hike by the central bank might strengthen the CAD against other currencies.

• Support levels: 1.3397, 1.3334, 1.3267
• Resistance levels: 1.3478, 1.3544, 1.3589, 1.3589, 1.3647, 1.3667, 1.3695

From the point of view of technical analysis, the trend on the USD/CAD currency pair in the medium term is still bearish. At the moment, the price is forming a wide-volatile corridor. The MACD indicator is in the negative zone; there is weak sellers' pressure inside the day. Under such market conditions, it is best to look for buy trades from the support level of 1.3397, but with confirmation in the form of buyers' reaction to the level. Sell positions are best sought from the resistance level of 1.3478 but with confirmation in the form of a sellers' initiative as well.

• – Canada BoC Gov Macklem Speaks at 18:00 (GMT+3).

by JustMarkets, 2023.05.18

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.