The Analytical Overview of the Main Currency Pairs on 2022.08.08

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0245
• Prev. Close: 1.0177
• % chg. over the last day: -0.66%

The US non-farm payrolls report for July 2022 surprised analytics with an increase. Employment rose by 528,000, more than double the consensus forecast. The unemployment rate fell to 3.5%, matching the lows seen in a robust labor market before the pandemic. Average hourly earnings rose by 5.2% in 12 months. Such data suggest that the Federal Reserve will not slow the pace of interest rate increases. The Fed will seek to raise rates as much as possible so that it will have room to lower them when unemployment starts to rise, and the economy faces a recession.

Trading recommendations

• Support levels: 1.0176,1.0146,1.0112,1.0035,1.0000
• Resistance levels: 1.0222,1.0245,1.0264,1.0284,1.0365,1.0415,1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hour time frame is bullish. The price is still forming a wide volatile balance with the borders of 1.0112-1.0284. But on Friday, quotes fell on the non-farms report due to the strengthening of the dollar index. Under such market conditions, buy trades are best to consider on intraday time frames from the support level of 1.0176. Sell trades can be considered from the resistance level of 1.0221 or 1.0245, but only after additional confirmation and only with short targets.

Alternative scenario:

if the price breaks down through the 1.0112 support level and fixes below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2168
• Prev. Close: 1.2064
• % chg. over the last day: -0.86%

This week the UK GDP report for last month and Q2 will be released. After the Bank of England warned last week that it expects the economy to enter a 15-month recession later this year, analysts are predicting a GDP slowdown. With the Bank of England also planning to take a break in raising interest rates, the British pound could see a wave of sell-offs.

Trading recommendations

• Support levels: 1.2063,1.2006,1.1803
• Resistance levels: 1.2123,1.2167,1.2209,1.2294

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish, but on Friday, the price broke through the priority change level but failed to consolidate below, thus forming a false break down. The MACD indicator becomes negative. If the price holds below 1.2063 again, there will be a trend change. At the moment, it is better to look for buy trades on the intraday timeframes from the support level of 1.2063, but only with a confirmation. Sell trades can be considered from the resistance level of 1.2123, but only after additional confirmation and with short targets.

Alternative scenario:

if the price breaks down through the 1.2063 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 132.82
• Prev. Close: 135.01
• % chg. over the last day: +1.64%

The Japanese yen is again falling against the US dollar as demand for the haven asset of the dollar rises amid tensions between the US and China and the global economic outlook. The Bank of Japan’s ultra-soft monetary policy to support economic recovery has left the Japanese yen behind other G-10 currencies, while other central banks are seeking to raise interest rates. Nevertheless, several Japanese policymakers said last week that an exit strategy from massive stimulus was needed. This could hint at a likely shift in the central bank’s monetary policy stance.

Trading recommendations

• Support levels: 134.29,133.42,132.12,131.37,130.85
• Resistance levels: 135.29,136.03,137.11

From the technical point of view, the medium-term trend on the USD/JPY currency pair is close to changing to the uptrend. The price is now trading at the priority change level but has not yet consolidated higher. A break of 135.29 will change the trend. Under such market conditions, buy trades can be sought from the support level of 134.29 or 133.42, but with additional confirmation. Resistance levels of 135.29 may be considered for sell deals, but only with additional confirmation in the form of a reverse initiative, as the price has already tested it.

Alternative scenario:

If the price fixes above 135.29, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2856
• Prev. Close: 1.2935
• % chg. over the last day: +0.61%

Canada’s unemployment rate remained at 4.9%, with the number of jobs down by 30.6 thousand. Employment in Canada remains about 423 thousand above pre-pandemic levels. This continues to be a stronger cumulative job recovery than in the United States. Against the backdrop of a strong labor market, the Bank of Canada will also be looking to raise interest rates to have room to cut them further. Analysts believe that the Bank of Canada is now likely to pay more attention to wages as they fuel the prevailing inflation fears.

Trading recommendations

• Support levels: 1.2900,1.2876,1.2802,1.2786
• Resistance levels: 1.2965,1.3006,1.3085,1.3154

In terms of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price confidently broke through the priority change level and consolidated above. The MACD indicator has become positive, and the buyers’ pressure remains, but for the optimal entry points, it is necessary to wait for a slight correction. Under such market conditions, buy trades should be considered on the lower timeframes from the support level of 1.2900, but only with confirmation and short targets. For sell deals, it is better to consider the resistance level of 1.3006, but with confirmation.

Alternative scenario:

if the price breaks out and consolidates below the 1.2786 support level, the downtrend will likely resume.