The Analytical Overview of the Main Currency Pairs on 2022.08.03

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0261
• Prev. Close: 1.0165
• % chg. over the last day: -0.94%

New tensions between the US and China triggered a rise in the US dollar. Investors returned to safe-haven assets yesterday amid growing tensions between the US and China over a visit by the US speaker to the island of Taiwan, which China considers its territory. Also, the dollar was strengthened by Fed officials’ statements, which indicated that a 0.75% rate hike at the September meeting is also under active consideration. A possible economic slowdown is needed to slow inflation. The euro and other assets fell against the dollar.

Trading recommendations

• Support levels: 1.0112,1.0035,1.0000
• Resistance levels: 1.0191,1.0264,1.0284,1.0365,1.0415,1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is still forming a wide volatile balance, but the sellers’ initiative has replaced the buyers’ pressure. The MACD indicator has become negative. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 1.0112. Sell trades can be considered from the resistance level of 1.0191 or 1.0264, 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: 1.2241
• Prev. Close: 1.2161
• % chg. over the last day: -0.65%

The Bank of England will hold its monetary policy and interest rate meeting tomorrow. Five consecutive 25 basis point hikes have raised the bank rate to 1.25%, but actual inflation continues to rise, and inflation expectations remain dangerously high. Three bank officials last time wanted a 50 basis point increase, and with the economy’s apparent growing problems, a majority may now favor a larger move. Also, tomorrow, the Bank of England is due to present a plan to reduce its balance sheet. QE is still a whopping £843.8 billion, and just last month, Bank of England Governor Bailey said that the Central Bank was considering cutting its assets.

Trading recommendations

• Support levels: 1.2152,1.2114,1.2114,1.2063,1.1907,1.1803
• Resistance levels: 1.2203,1.2294

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is now balanced and trading between the moving averages. The MACD indicator is in the negative zone, and there is an initiative from the sellers. Under such market conditions, it is better to look for buy trades on the intraday time frames from the support level 1.2152 or 1.2114, but only with confirmation. Sell trades can be considered from the resistance level of 1.2203, but only after additional confirmation and with short targets.

Alternative scenario:

if the price breaks down through the 1.2006 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 131.69
• Prev. Close: 133.15
• % chg. over the last day: +1.11%

The Japanese yen was on track for its biggest gain since the coronavirus crisis in March 2020, as growing tensions between the US and China over Taiwan and deepening fears of a global economic slowdown increased the appeal of safe-haven assets. Against the dollar, the Japanese currency brought its cumulative gains to nearly 4.5% in five trading sessions. But the US dollar is also a safe-haven currency, so yesterday, it closed the day in the background of the dollar index growth. It is also worth keeping in mind that the US Federal Reserve is on the path to higher interest rates, while the Bank of Japan keeps its monetary policy soft. Such opposite policy plays in favor of USD/JPY quotes growth.

Trading recommendations

• Support levels: 132.42,131.37,130.85
• Resistance levels: 133.17,134.00,135.29,136.03,137.11

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bearish. In the last trading sessions, the Japanese yen has strengthened, but yesterday the dollar intercepted the initiative. The MACD indicator became positive. Under such market conditions, buy trades can be sought from the support level of 132.42 or 131.37, but with additional confirmation. Resistance levels of 134.00 may be considered for sell deals, but only with additional confirmation and short targets.

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: 1.2841
• Prev. Close: 1.2879
• % chg. over the last day: +0.29%

USD/CAD quotes increased yesterday on the back of a rising dollar and because of lower oil prices. The Canadian weakness was also affected by the manufacturing data. The manufacturing PMI fell from 54.6 to 52.5. The latest survey showed a new decline in production and new orders, while employment growth slowed. The sector was hit particularly hard in July by a drop in export sales. Cost pressures continued on the price front, with higher material, food, and transportation costs often cited as the main drivers of inflation.

Trading recommendations

• Support levels: 1.2786
• Resistance levels: 1.2880,1.2923,1.3006,1.3085,1.3154

In terms of technical analysis, the USD/CAD currency pair trend is bearish. At the moment, the price is forming a wide balance. The MACD indicator became positive, and there was an initiative of buyers. Under such market conditions, it is better to consider sell deals from the resistance level of 1.2880, but with confirmation. Buy trades should be considered on the lower time frames from the support level of 1.2786 or from the lower border of the channel, but only with confirmation and short targets.

Alternative scenario:

if the price breaks out and consolidates above the 1.3006 resistance level, the uptrend will likely resume.