The Analytical Overview of the Main Currency Pairs on 2022.09.07

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9921
• Prev. Close: 0.9903
• % chg. over the last day: -0.18%

The US service sector PMI Index rose to a four-month high due to increased demand. The dollar Index and Treasury yields rose sharply after strong economic data, with the 10-year Treasury yield reaching a new three-month high. This in turn, put negative pressure on the European currency, which is trading near multi-year lows again.

Trading recommendations

• Support levels: 0.9900
• Resistance levels: 0.9963,0.9988,1.0016,1.0046,1.0077,1.0111,1.0150

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. EUR/USD quotes are trading below parity. Technically, there is a formation of a wide balance with a range of 0.9912-1.0077, but the price is now trading below the level of 0.9912. The MACD indicator is in the negative zone, and selling pressure remains, but there are signs of divergence. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 0.9912 after the price fixes higher. Sell trades can be considered from resistance levels of 0.9963 or 0.9988, but only after the additional confirmation.

Alternative scenario:

if the price breaks out of the 1.0047 resistance level and fixes above, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1508
• Prev. Close: 1.1517
• % chg. over the last day: +0.08%

UK 10-year bond yields exceeded 3%, the highest level in over a decade, amid expectations that new Prime Minister Liz Truss will trigger a wave of government spending. Swaps related to the Bank of England policy meetings show that expectations of a rate hike have been rising steadily since early August, meaning that the key rate will more than double by the end of the year. There are fears that inflation, which was 10.1% in July, will spiral out of control, even after six consecutive rate hikes by policymakers.

Trading recommendations

• Support levels: 1.1500,1.1400
• Resistance levels: 1.1669,1.1816,1.1901,1.1994,1.2035,1.2167

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving average levels, and below the psychological level of 1.1500, the MACD indicator is negative again. It is best to look for sell trades on intraday time frames, the nearest resistance level is 1.1500. Buy trades can be considered from the support level of 1.1500 if the price consolidates above the round level.

Alternative scenario:

if the price breaks out through the 1.1670 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 140.57
• Prev. Close: 142.78
• % chg. over the last day: +1.57%

From a fundamental point of view, the Bank of Japan is firmly committed to its soft policy through its Yield Curve Control (YCC) program, while the US Fed continues to aggressively raise interest rates in an attempt to rein in inflation. And until the BoJ starts to worry about inflation or the Fed sees that the US economy has slowed enough to suspend rate hikes, these fundamental dynamics will continue to push USD/JPY quotes up. With 2-year Treasury yields hitting 3.50%, the highest level in 15 years, there is little sign of the fundamental momentum weakening yet. But after the yen plunged sharply yesterday, the Bank of Japan said it would increase its planned bond purchases as an escalating sell-off in Treasuries puts upward pressure on global yields and weakens the yen.

Trading recommendations

• Support levels: 142.83,141.77,141.00,139.61,138.78,137.65,136.80,135.20
• Resistance levels: 144.00,145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the average lines, and the buyers’ pressure is still there. The MACD indicator remains positive, there is no sign of reversal. Under such market conditions, buy trades can be sought from the support level of 142.83 or 141.77, but with additional confirmation. Sell deals can be considered on the intraday time frames from the psychological level of 144.00, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario:

If the price fixes below 139.61, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3134
• Prev. Close: 1.3149
• % chg. over the last day: +0.11%

The Bank of Canada will hold a monetary policy meeting today. The Bank of Canada is expected to raise its key rate by 75 basis points to 3.25% as another step in the fight against inflation. The focus is on whether the bank will call for further tightening or not. In its latest statement released July 13, the bank said, “The Board of Governors continues to believe that interest rates will need to be raised further, and the pace of the increase will be determined by the bank’s current assessment of the economy and inflation.” Going forward, analysts expect the BoC to pause in its October 26 policy decision.

Trading recommendations

• Support levels: 1.3157,1.3077,1.3020,1.2989,1.2958,1.2936,1.2900
• 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 positive, and there is slight buying pressure. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3157, but only with confirmation. For sell deals, it is better to consider the resistance level of 1.3220, but only after a false breakout, as the level has already been tested, and a lot of liquidity has been formed above the level.

Alternative scenario:

if the price breaks down and consolidates below the 1.3077 support level, the downtrend will likely resume.