The Analytical Overview of the Main Currency Pairs on 2022.08.22

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0089
• Prev. Close: 1.0038
• % chg. over the last day: -0.51%

Europe’s economy is at risk of recession due to threats of energy rationing, record inflation, and tighter monetary policy. Germany, Europe’s largest economy, has become the region’s weak spot as its huge industrial base suffers from rising energy prices and persistent supply shortages. Supply managers’ indices, due out Tuesday, will tell traders whether the region’s economy is heading for a recession or not. The July ECB meeting minutes may indicate whether investors should prepare for another 50 basis point rate hike in September. But given widespread inflationary pressures, analysts are confident of such a hike, with about a third of analysts leaning toward a 75 basis point increase.

Trading recommendations

• Support levels: 1.0033,1.0000
• Resistance levels: 1.0112,1.0146,1.0230,1.0286,1.0365,1.0415,1.050.

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The euro continues to lose ground. The MACD indicator is in the negative zone, but there are the first signs of divergence. Under such market conditions, it is better to look for buy trades on the intraday time frames from the support level of 1.0033, but with a confirmation in the form of reverse initiative. Sell trades can be considered from resistance levels of 1.0112, but only after the additional confirmation.

Alternative scenario:

if the price breaks out of the 1.0230 resistance level and fixes above, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1927
• Prev. Close: 1.1829
• % chg. over the last day: -0.82%

According to analysts, the UK’s bleak economic outlook overshadows any gains that the British pound could get from a rapid rise in interest rates. Another record inflation figure last week prompted traders to bet that the Bank of England will more than double its key rate to 3.75%. Options traders remain decidedly bearish on the British currency. In theory, a rate hike should act as a tailwind for currencies and a headwind for bonds. But the UK has poor growth prospects, price pressures, and policy rate uncertainty.

Trading recommendations

• Support levels: 1.1811
• Resistance levels: 1.1903,1.2000,1.2035,1.2167,1.2215,1.2294

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is now trading below the moving averages, indicating selling pressure. The MACD indicator has become negative, but there are no signs of divergence. At the moment, it is better to look for sell trades from the resistance level of 1.1903, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1811, but only with confirmation.

Alternative scenario:

if the price breaks out through the 1.2034 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 135.86
• Prev. Close: 136.89
• % chg. over the last day: +0.76%

The US Federal Reserve’s policy meeting in late July sent the dollar index sharply higher, even though the Central Bank raised its interest rate by 75 basis points. Over the past three weeks, the Japanese yen has fallen against the dollar again as interest rate differentials and opposed monetary policy put upward pressure on the USD/JPY quotes. And no change is expected soon.

Trading recommendations

• Support levels: 135.89,135.35,134.23,133.47,132.27,131.08,130.85
• Resistance levels: 137.10,138.25

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The USD/JPY quotes continue to grow steadily, breaking through all the resistance levels. Under such market conditions, buy trades can be sought from the support level of 135.89, but with additional confirmation. For sell deals, it is possible to consider the resistance level of 137.10, but only with additional confirmation in the form of a reverse initiative, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario:

If the price fixes below 134.23, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2944
• Prev. Close: 1.2991
• % chg. over the last day: +0.36%

Last week, the Canadian dollar suffered the same fate as the other currencies: the US dollar took the lead after markets reacted positively to the July Fed meeting minutes. Oil prices also declined over the week, which had a negative impact on the Canadian currency. But retail sales data helped the Canadian offset some of Friday’s losses, signaling a gradual and consistent improvement in the retail sector.

Trading recommendations

• Support levels: 1.2900,1.2858,1.2809,1.2761
• Resistance levels: 1.3006

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator is in the positive zone. The buyers’ pressure is still there, but the price is traded before the resistance level, plus the divergence is getting stronger. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2900, but only with confirmation. For sell deals, it is better to consider the resistance level of 1.3006, but also with confirmation.

Alternative scenario:

if the price breaks down and consolidates below the 1.2858 support level, the downtrend will likely resume.