The Analytical Overview of the Main Currency Pairs on 2022.10.19

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9833
• Prev. Close: 0.9850
• % chg. over the last day: +0.17%

ZEW economic sentiment index showed some improvement in both Germany and the Eurozone, but the numbers are still at multi-year lows. Eurozone’s inflation data for September will be released today. Analysts believe consumer prices will reach 10% annually (current inflation is 9.1%). If the data does indeed point to such a jump in inflation, there will be no doubt that the ECB will move to a more aggressive pace of interest rate hikes for the remaining two meetings this year.

Trading recommendations

• Support levels: 0.9752,0.9701
• Resistance levels: 0.9856,0.9961,1.0058,1.0111,1.0162,1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is positive again, but the buyers’ pressure is weakening due to the presence of divergence. Buy trades should be considered from the support level of 0.9752, but with additional confirmation in the form of reverse initiative. Sell deals may be considered from the resistance level of 0.9856, but only with confirmation.

Alternative scenario:

if the price breaks down through the support level of 0.9666 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1349
• Prev. Close: 1.1306
• % chg. over the last day: -0.38%

The Bank of England said Tuesday that it would continue with plans to sell a portion of its huge government bond package with its first sale on November 1. The Bank of England also said that sales for the remainder of 2022 would be in the short and medium-term maturity sectors rather than long-term bonds. Thus, the Bank of England is trying to stabilize the UK financial system. Jeremy Hunt, the new finance minister, canceled most of the tax cuts contained in the recent mini-budget and told parliament that spending cuts and tax increases are coming. Hunt cut a plan to cap consumer energy bills, leading to higher inflation. Today, investors will focus on the UK consumer price index, where double-digit numbers are expected.

Trading recommendations

• Support levels: 1.1186,1.1093,1.0915,1.0817
• Resistance levels: 1.1367,1.1478,1.1693,1.1816,1.1901

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading at the level of the moving averages. The MACD indicator is in the positive zone, but there is a divergence, which indicates the weakness of the buyers. Under such market conditions, buy trades can be considered from the support level of 1.1186, but better after confirmation. Sell trades are best to look for on intraday time frames, and the nearest resistance level is 1.1367.

Alternative scenario:

if the price breaks down of the 1.1094 support level and fixesif the price breaks down of the 1.1094 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.01
• Prev. Close: 149.23
• % chg. over the last day: +0.15%

Suppose the USD/JPY rises above the symbolic 150 level. In that case, the price movement will naturally accelerate, so the Ministry of Finance might want to stop it before that or buy time,” said the executive director of the currency department at Credit Agricole CIB in Tokyo. Indeed, yesterday the Japanese Ministry of Finance tried currency intervention, but it was unsuccessful because of the strong dollar. The Bank of Japan has either to switch to a more neutral monetary policy and loosen the yield curve structure or simply accept that the yen will continue to depreciate.

Trading recommendations

• Support levels: 147.67,146.44,145.93,144.91,144.16,143.00,140.60,139.61,
• Resistance levels: 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving levels. The price is trading above the moving levels. The MACD indicator is in the positive zone, the buyers’ pressure is still there, but divergence has appeared. Under such market conditions, buy trades can be sought on the intraday time frames from the support level of 147.67, but with confirmation. Sell deals can be searched from the resistance level of 150.00, but only with additional confirmation in the form of a reverse initiative.

Alternative scenario:

If the price fixes below 146.42, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3709
• Prev. Close: 1.3727
• % chg. over the last day: +0.13%

Inflation data will be released in Canada today. Analysts are predicting that consumer prices will fall for the third consecutive month. Year-over-year inflation is expected to fall from 7% to 6.8%. If the data matches expectations, the Bank of Canada will likely move to a slower pace of rate hikes or take a pause altogether to observe the dynamics. But if the data shows an uptick in inflation, especially in core inflation, there is no doubt that the Bank of Canada will continue to raise interest rates to keep up with the US Federal Reserve. Also, keep in mind that the Canadian dollar is a commodities currency and is also highly dependent on the oil price performance, which has been declining for the last 2 trading days amid concerns about increased supply in the US coupled with slowing economic growth and decreased fuel demand in China.

Trading recommendations

• Support levels: 1.3732,1.3619,1.3583,1.3535,1.3454
• Resistance levels: 1.3855,1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of moving averages. The MACD indicator has become inactive. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3732, but after confirmation in the form of an impulse initiative. For sell deals, it is better to consider the resistance level of 1.3855, but only after an additional confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3677, the downtrend will likely resume.