The Analytical Overview of the Main Currency Pairs on 2022.12.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0592
• Prev. Close: 1.0615
• % chg. over the last day: +0.22%

This is the last trading week of the year. With many investors closing their books for the year and many traders and managers going on vacation, liquidity will be less than usual. This means the markets may move sharply without any news. The dollar fell against most currencies in trading Friday as recent data signaled that the US Personal Consumption Index (PCE) is slowing, reinforcing expectations for a smaller interest rate hike by the Federal Reserve and improving investors’ appetite for risk. The Fed is expected to raise interest rates by only 25 basis points at its next meeting.

Trading recommendations

• Support levels: 1.0549,1.0483,1.0361,1.0332,1.0284,1.0193
• Resistance levels: 1.0667,1.0695

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is forming a price corridor. The price is forming a wide price corridor. The MACD indicator has become positive, and buyers are again dominating inside the day. Under such market conditions, buy trades are best considered from support levels on intraday time frames, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0667, but better with a confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0549 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2025
• Prev. Close: 1.2046
• % chg. over the last day: +0.17%

A turbulent year for the British pound is coming to an end, and there are a few signs that 2023 will be optimistic. Signs of a painful economic downturn in the UK continue to accumulate, making analysts doubt whether the pound can extend or even sustain its recent rebound against the dollar. The options market is also showing skepticism, with traders still bearish on the long-term outlook. Yield spreads between two- and 10-year swaps tied to the overnight rate, an indicator of recession risks, also point to a longer recession in the UK than in other major economies. Analysts at JPMorgan Chase & Co. predict that the pound will return to $1.14 by the end of the first quarter of 2023.

Trading recommendations

• Support levels: 1.2044,1.1979,1.1684,1.1476,1.1418
• Resistance levels: 1.2093,1.2218,1.2308,1.2431,1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to bearish. The MACD indicator has become positive, but the buyers’ pressure is quite weak. On the other hand, the price managed to return above the moving averages. Under such market conditions, it is better to look for buy trades from the support at 1.2044, but with confirmation on the intraday time frames. Sell trades are best sought from the resistance level of 1.2093, but also better with confirmation.

Alternative scenario:

if the price breaks out through the 1.2308 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 132.67
• Prev. Close: 132.77
• % chg. over the last day: +0.07%

The market is still dominated by news of the Bank of Japan’s upward revision to its yield curve control policy, which has given a significant boost to the yen and brought short yen futures positions to their lowest level since August. But Bank of Japan (BOJ) Governor Haruhiko Kuroda said on Monday that the BOJ’s decision last week to widen the permissible range around its yield target was intended to reinforce the effect of its ultra-soft policy, not a first step toward canceling a massive stimulus program, and the bank would aim for sustained and stable price targets accompanied by wage increases while continuing to ease monetary policy under yield curve control. Such a statement may return the USD/JPY currency pair bullish as the interest rate differential is not in favor of the yen.

Trading recommendations

• Support levels: 132.27,131.22
• Resistance levels: 133.53,134.73,135.88,137.03,138.00,139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator has become inactive, and a narrow price range in the form of a “wedge” pattern is being formed. During the day, there is a slight buyers’ pressure. Buy trades are best considered on intraday time frames from the support level of 132.27, but only with confirmation. Sell deals can be looked for from the resistance level of 133.53, provided there is a reverse reaction.

Alternative scenario:

If the price fixes above 137.00, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3651
• Prev. Close: 1.3594
• % chg. over the last day: -0.42%

Canada’s GDP grew by 0.1% over the last month. On the one hand, the economy is still on a growth trajectory. On the other hand, there are signs of a slowdown in GDP growth over the last 3 months. It is highly likely that Canada’s Central Bank will continue to raise the cost of borrowing (interest rate) but will become more “dovish” so as not to hurt the economy too much. Analysts expect a 0.25% rate hike at the next meeting, after which the bank is likely to pause for a few months. The strengthening of the Canadian dollar in recent days is due to rising oil prices.

Trading recommendations

• Support levels: :1.3521,1.3438,1.3386,1.3360,1.3281,1.3212
• Resistance levels: :1.3590,1.3656,1.3700,1.3776,1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. But the MACD indicator is in the negative zone, and sellers dominate within the day. Yesterday, the price consolidated below the moving averages, which increases the probability of a change in the trend. Buy trades should be considered from the support at 1.3522, but with a confirmation in the form of a reverse initiative. Sells are best to look for on intraday time frames from the resistance level of 1.3590, but with confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.