The Analytical Overview of the Main Currency Pairs on 2022.08.30

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9964
• Prev. Close: 0.9998
• % chg. over the last day: +0.34%

The euro moved closer to parity against the dollar on Monday as representatives of the European Central Bank started talking about a tentative rate hike. Opinions are split, with some bankers calling for a 50 basis point hike and others seeking a 75 bps increase. According to Refinitiv, the probability of a 75 basis point hike on September 8 jumped to 67%. The inflation report will also be released this week, giving more hints. A rise in inflation figures in the Eurozone would give confidence to the euro, as a 0.75% hike scenario would be more likely.

Trading recommendations

• Support levels: 0.9951
• 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 between the moving averages again, which makes it difficult to find good entry points. The MACD indicator has become positive. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 0.9951, 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: 1.1722
• Prev. Close: 1.1705
• % chg. over the last day: -0.14%

Goldman Sachs Group, Inc. expects the UK economy to slip into recession later this year, with the risk of a deep recession amid a surge in energy prices. The UK Gross Domestic Product (GDP) is expected to fall about 1% by mid-2023. The annual output is likely to fall by 0.6% next year. It is expected that the Bank of England may not want to tighten monetary policy sharply in the medium term, as a sharp growth cycle could exacerbate the impending recession. Against this backdrop, the sterling will lack the catalysts necessary for a sustained and prolonged recovery against the dollar.

Trading recommendations

• Support levels: 1.1659
• Resistance levels: 1.1715,1.1814,1.1838,1.1901,1.1994,1.2035,1.2167

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The British pound continues to lose ground. The price is trading below the moving levels, and the MACD indicator is in the negative zone, but there are the first signs of divergence. At the moment, it is better to look for sell trades from the resistance level of 1.1715 or 1.1814, 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 1.1901 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 137.63
• Prev. Close: 138.70
• % chg. over the last day: +0.78%

The Japanese yen depreciated after Federal Reserve Chairman Jerome Powell announced a hawkish stance by the central bank’s board. The Bank of Japan (BOJ) has pledged to maintain a soft monetary policy and is actively suppressing the Japanese Government Bond yield curve (JGB). Keeping rates low leads to further weakening of the yen.

Trading recommendations

• Support levels: 138.58,137.49,136.85,135.89,135.35,134.23,133.47,132.27
• Resistance levels: 139.40

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 is positive. Under such market conditions, buy trades can be sought from the support level of 137.49, but with additional confirmation. For sell deals, it is possible to consider a resistance level of 139.40, but only with additional confirmation, as fundamentally, the USD/JPY quotes are inclined to grow.

Alternative scenario:

If the price fixes below 136.85, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3031
• Prev. Close: 1.3011
• % chg. over the last day: -0.15%

Crude oil prices jumped about 4% on Monday as expectations of OPEC+ cartel production cuts increase with each day. Apparently, OPEC+ countries are getting greedy and trying to push oil prices back to this year’s highs. The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian dollar. In the near future, the USD/CAD rate dynamics will be determined only by changes in oil prices since the interest rates of the Bank of Canada and the US Federal Reserve are at the same level.

Trading recommendations

• Support levels: 1.2958,1.2940,1.2900,1.2858,1.2809,1.2761
• Resistance levels: 1.3043,1.3090,1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading near the moving averages and near the support areas. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2958 or 1.2940, but only with confirmation. For sell deals, it is best to consider the resistance level of 1.3043, 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.