The Analytical Overview of the Main Currency Pairs on 2022.08.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9973
• Prev. Close: 0.9964
• % chg. over the last day: -0.09%

A recession in the Eurozone is now very likely. Still, it alone will not lower inflation, and the European Central Bank should opt for a significant interest rate hike next month, ECB policymaker Martins Kazaks said on Saturday. The ECB raised rates by 50 basis points in July, and a similar move is scheduled for September 8, but some policymakers have begun talking about even more hikes as the outlook for inflation worsens. Mr. Kazacs also added that with zero rates now, the ECB is still supporting the economy, and by the first quarter of next year, the bank should reach a neutral level that does not slow or stimulate the economy.

Trading recommendations

• Support levels: 0.9931
• Resistance levels: 1.0032,1.0112,1.0146,1.0230,1.0286,1.0365

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages again. The MACD indicator has become negative. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 0.9931, but with confirmation. Sell trades can be considered from resistance levels of 1.0032, but only after the additional confirmation.

Alternative scenario:

if the price breaks out of the 1.0146 resistance level and fixes above, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1833
• Prev. Close: 1.1737
• % chg. over the last day: -0.82%

Amid talk that inflation will exceed 18% next year and families across the country are likely to face energy poverty this winter, Britain’s economic woes are worsening by the day. Analysts agree that the Bank of England will have no choice but to plunge the economy into a serious recession and cause massive job cuts to curb price pressures. Rising energy prices are fueling financial markets with higher inflation forecasts, leading traders to believe the Bank of England should be more aggressive. Money markets are now showing expectations of a 4.25% rise in the benchmark interest rate next year, the highest level since 2008.

Trading recommendations

• Support levels: 1.1659
• Resistance levels: 1.1838,1.1901,1.1994,1.2035,1.2167,1.2215,1.2294

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The British pound is losing ground again and doing it faster than the euro. The MACD indicator has turned negative, and prices are below the moving levels again. At the moment, it is better to look for sell trades from the resistance level of 1.1838 or 1.1901, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1659, but only with confirmation and short targets.

Alternative scenario:

if the price breaks out through the 1.1994 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 136.48
• Prev. Close: 137.52
• % chg. over the last day: +0.76%

According to analysts, wage growth in Japan will lag behind inflation for the next 12 months. And that’s bad news for the economy. And it is one of the reasons why the Bank of Japan should keep its massive monetary stimulus and dovish policy until wages show more clear signs of growth. Thus, the Japanese yen will be under the pressure of low rates at least till the end of the year, which will contribute to the further growth of USD/JPY quotes amid the tightening of the policy by the US Fed.

Trading recommendations

• Support levels: 136.85,135.89,135.35,134.23,133.47,132.27,131.08,130.85
• Resistance levels: 138.55

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 average lines again, and the buyers’ pressure is increasing. The MACD indicator has become positive. Under such market conditions, buy trades can be searched for from the support level of 136.85, but with additional confirmation. For sell deals, it is possible to consider the resistance level of 138.55, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario:

If the price fixes below 135.35, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2927
• Prev. Close: 1.3027
• % chg. over the last day: +0.77%

The US Energy Information Administration says oil and natural gas will remain the dominant energy sources through 2050. Although renewables will expand rapidly, 70% of the world’s energy in 2050 will still come from fossil fuels. Canada is the world’s fifth-largest producer and fourth-largest exporter of oil and natural gas. The future of Canada’s oil and gas sector is to produce them with the lowest possible greenhouse gas emissions. This takes advantage of the fact that G7 countries, including Canada and the European Union, classify natural gas as a transitional form of green energy. Thus, the Canadian dollar will be even more dependent on the dynamics of oil and natural gas prices. And that is the reason why rising energy prices, along with monetary tightening by the Bank of Canada, are keeping the Canadian dollar in line with the US dollar.

Trading recommendations

• Support levels: 1.3036,1.2965,1.2943,1.2900,1.2858,1.2809,1.2761
• Resistance levels: 1.3090,1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is currently trading at the resistance level, with buyer pressure temporarily prevailing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3036, but only with confirmation. For sell deals, it is best to consider the resistance level of 1.3090, but only with short targets.

Alternative scenario:

if the price breaks down and consolidates below the 1.2900 support level, the downtrend will likely resume.