The Analytical Overview of the Main Currency Pairs on 2022.09.01

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0014
• Prev. Close: 1.0052
• % chg. over the last day: +0.38%

Eurozone inflation reached 9.1% y/y (forecast -9.0%, previous -8.9%). Consumer prices continue to rise due to a surge in energy prices. Unlike the US, Europe is still unable to cope with this problem. As a result, ECB politicians started talking about a possible increase of the ECB rate by 0.75% on September 8. On the other hand, it is worth mentioning that the US Fed is approaching the end of its tightening cycle while the ECB is just entering its tightening cycle. Analysts think that the rate differential between the euro and the dollar will start to narrow, leading to the strengthening of the euro and a decline in the value of the US dollar in the next 12 months.

Trading recommendations

• Support levels: 1.0008,0.9951
• Resistance levels: 1.0072,1.0112,1.0146,1.0230,1.0286,1.0365

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. But the euro has been getting stronger during the last three trading sessions. The MACD indicator is in the positive zone, but there are signs of divergence. Under such market conditions, it is better to look for buy trades on the intraday time frames from the support level of 1.0008, but with a confirmation. Sell trades can be considered from resistance levels of 1.0072 or 1.0112, 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: 1.1647
• Prev. Close: 1.1622
• % chg. over the last day: -0.21%

The British Retail Consortium BRC, launched in 2005, states that store price inflation accelerated to 5.1% in August from 4.4% in July, a new record for the Index. The increase in food prices reached 9.3%. According to NielsenIQ, which provides data for the BRC, this level of food inflation could continue for at least another six months. Britons are preparing for a recession and consumers are doing everything they can to save money. With rising inflationary pressures, businesses will undoubtedly start to tightly control costs and profit margins where possible, so a wave of layoffs and rising unemployment may also join the energy crisis.

Trading recommendations

• Support levels: 1.1561
• Resistance levels: 1.1670,1.1817,1.1838,1.1901,1.1994,1.2035,1.2167

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 on the intraday time frames, the nearest resistance level is 1.1670. Buy trades can be considered from the support level of 1.1561, but only after an additional confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks out through the 1.1838 resistance level and fixes above, the uptrend will likely resume

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 138.78
• Prev. Close: 138.95
• % chg. over the last day: +0.12%

Japan will step up supervision of bank risk controls as rising interest rates overseas create losses in their foreign bonds, reflecting concerns about the impact of US monetary policy tightening on the country’s financial system. Cumulative estimated losses on the leading banking groups’ foreign bonds totaled  2.656 trillion yen (19.12 billion) at the end of June, up more than 50% from the end of March. The Bank of Japan has not joined the global interest-rate hike cycle because Japan’s inflation is still moderate,and its economy is fragile. This stimulative policy has a negative effect on the national exchange rate.

Trading recommendations

• Support levels: 137.67,136.85,135.89,135.35,134.23,133.47,132.27
• 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 pressure of buyers remains. The MACD indicator remains positive, but there are signs of divergence, which means that a technical correction will take place soon. Under such market conditions buy trades can be sought from the support level of 137.67, but with additional confirmation. For sell deals, traders can consider the resistance level of 139.40, but only with additional confirmation, as fundamentally, 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: 1.3091
• Prev. Close: 1.3132
• % chg. over the last day: +0.31%

Canada’s real GDP rose by 0.1% last month. Manufacturing, wholesale utilities, and retail trade saw a slight decline in production. But it was offset by mining, oil and gas, agriculture, forestry, and hunting growth. At the moment, the Canadian dollar, as a commodity currency, is losing ground due to falling oil prices.

Trading recommendations

• Support levels: 1.3103,1.3026,1.2992,1.2958,1.2940,1.2900,1.2858,1.2809,1.2761
• Resistance levels: 1.3220

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading above the moving averages. The MACD indicator is in the positive zone, but there are signs of divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support levels of 1.3103 or 1.3026, but only with confirmation. For sell deals, it is better to consider the resistance level of 1.3220, but only after additional confirmation, as the level has already been tested.

Alternative scenario:

if the price breaks down and consolidates below the 1.2992 support level, the downtrend will likely resume.