The Analytical Overview of the Main Currency Pairs on 2022.10.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9727
• Prev. Close: 0.9697
• % chg. over the last day: -0.31%

The US dollar strengthened sharply on Monday after Russia launched a series of missile attacks on critical infrastructure in Ukraine and on ordinary residential areas, including the capital Kyiv. Analysts believe the US dollar could make a move to new yearly highs as inflation data to be released this week will likely point to a rise in core inflation, confirming the prospect of another massive rate hike at the next meeting. According to the rate monitoring tool, 81% of traders expect the Fed to raise rates by 75 basis points at the next meeting. Thus, the fundamental picture now favors a rise in the dollar. On the other hand, if this week’s inflation data shows a slowdown in consumer price growth, the markets may see a sharp strengthening of risky currencies such as the euro and the pound.

Trading recommendations

• Support levels: 0.9667,0.9601.
• Resistance levels: 0.9856,0.9962,1.0058,1.0111,1.0162,1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The MACD is in the negative zone, but there is a divergence, indicating the weakness of the sellers. Buy trades should be considered from the support level of 0.9667, but with additional confirmation in the form of reverse initiative. Sell deals can 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: 1.1082
• Prev. Close: 1.1054
• % chg. over the last day: -0.25%

On September 28, amid an unprecedented revaluation of British assets, the Bank of England announced a temporary and targeted intervention to restore the functioning of the long-term government bond market and reduce risks associated with the spread of credit conditions for British households and businesses. To avoid dysfunction in major funding markets, these operations aim to allow investment funds to address risks associated with their resilience to volatility in the long-term securities market. The Bank of England plans to complete these operations and stop all bond purchases on Friday, October 14. Thus, after October 14, the British pound will lose some of its government support.

Trading recommendations

• Support levels: 1.0915,1.0816,1.0711,1.03
• Resistance levels: 1.1181,1.1248,1.1478,1.1693,1.1816,1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The MACD indicator is in the negative zone, but there is a divergence, which indicates the weakness of the sellers. Under such market conditions, buy trades can be considered from the support level of 1.0915, but only with confirmation. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1181, but also better with confirmation.

Alternative scenario:

if the price breaks down of the 1.0915 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 145.26
• Prev. Close: 145.73
• % chg. over the last day: +0.32%

Japan’s current account surplus shrank to its lowest level in August, with rising energy import prices outpacing rising export prices and depleting national wealth, Treasury Department data showed Tuesday. The deteriorating trade balance has caused the surplus to shrink for four consecutive fiscal years. While the cost of imports is rising as the yen weakens, the accompanying rise in exports, which are becoming cheaper for foreign buyers, has not been as significant because firms are moving production overseas. Policymakers are also increasingly concerned that the weak yen is driving up import bills and household living costs because of the heavy reliance on fuel and food imports.

Trading recommendations

• Support levels: 145.40,144.91,144.16,143.00,140.60,139.61,138.78,137.65
• Resistance levels: 145.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The MACD indicator has become positive. The price is trading above the moving levels again. Under such market conditions, buy trades can be searched for on the intraday time frames from the support level of 144.91, but with confirmation. Sell deals can be searched from the resistance level of 145.90, but only with an additional confirmation in the form of a false breakout.

Alternative scenario:

If the price fixes below 140.60, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3517
• Prev. Close: 1.3780
• % chg. over the last day: +0.38%

The Canadian dollar is a commodity currency and depends not only on the monetary policy of the Bank of Canada but also on the dollar Index and oil prices. Oil prices were down yesterday as fears of recession outweigh the prospect of tight supply. But fundamentally, oil prices are now trending higher due to OPEC+ production cuts, so once the US Fed’s hawkish background begins to change to a more dovish one, the Canadian dollar will be the first currency to begin to strengthen.

Trading recommendations

• Support levels: 1.3675,1.3619,1.3583,1.3535,1.3454
• Resistance levels: 1.3755,1.3858,1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish again. The price is trading above the moving lines again and is breaking through all the resistance lines. The MACD indicator has become positive, but there is a divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3675, but with confirmation. For sell deals, it is better to consider the resistance level of 1.3858, but only after the additional confirmation.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3583, the downtrend will likely resume.