The Analytical Overview of the Main Currency Pairs on 2022.09.26

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9826
• Prev. Close: 0.9683
• % chg. over the last day: -1.47%

The euro lost almost one and a half percent on Friday against the dollar. Yields on benchmark 10-year US Treasuries reached their highest level in more than 12 years, while German two-year bond yields exceeded 2% for the first time since late 2008. Markets are adjusting to the idea of higher interest rates at the same time that recession warnings are emerging. Analysts believe that in fact, by endorsing the idea of a recession, Fed Chairman Jerome Powell triggered an emotional bear market phase. Weak manufacturing PMI data in Europe added to the negative spiral. The strategists have now changed the rhetoric to: “the question now is not whether we are entering a recession, but how deep it will be.”

Trading recommendations

• Support levels: 0.9600
• Resistance levels: 0.9808,0.9865,0.9949,1.0111,1.0162,1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hour time frame is bearish. The price is trading below the moving averages, and sellers’ pressure is still high. The MACD indicator is negative, but divergence can be seen in several timeframes. It is best to look for sell trades from the resistance level of 0.9808 or 0.9866. Buy trades can be considered from the round level 0.9600, but only with confirmation.

Alternative scenario:

if the price breaks out through the resistance level of 0.9949 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1254
• Prev. Close: 1.0848
• % chg. over the last day: -3.74%

The British pound fell to a new 37-year low against the dollar after the country’s new finance minister announced historic tax cuts and a huge increase in borrowing. The new measures were announced by the government as harbingers of a new era for growth-oriented Britain. Investors are turning away from UK bonds amid an expected increase in government debt. Yields on UK 2-year government bonds have reached their highest level since October 2007, and yields on 10-year bonds have reached their highest level since 2010. Yields vary inversely with prices. As Britain has reached a record debt-to-GDP ratio, the pound could be revised downward if foreign investors are unwilling to finance the deficit. As a result, Britain risks a currency crisis in which the pound could reach parity with the dollar. According to Bloomberg, analysts expect UK interest rates to reach 5.2% in August 2023, with growing expectations that the Bank of England may raise interest rates by one percentage point at its next meeting in November.

Trading recommendations

• Support levels: 1.03
• Resistance levels: 1.0775,1.1021,1.1210,1.1449,1.1626,1.1693,1.1816,1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hour time frame is bearish. The price is currently trading below the moving averages, and sellers’ pressure remains. The MACD indicator is deeply negative, with no signs of a reversal. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.0775. Buy trades can be considered from round levels, but only with confirmation. The nearest support level on the daily timeframe is 1.03.

Alternative scenario:

if the price breaks out of the 1.1210 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 142.31
• Prev. Close: 143.33
• % chg. over the last day: +0.72%

According to analysts, the Japanese Yen will trade in the 140-145 range for the rest of the year. On the one hand, the difference in monetary policy between Japan and the USA will put pressure on the yen. On the other hand, the Ministry of Finance of Japan has intervened in the currency for the first time since 1998 and indicated that it will defend the level of USD/JPY 145.

Trading recommendations

• Support levels: 140.60,139.61,138.78,137.65,136.80,135.20
• Resistance levels: 144.27,145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite the intervention. The MACD indicator has become positive, the price has consolidated above the moving averages. Under such market conditions, buy trades can be sought on intraday time frames, but with confirmation. Sell deals can be considered from the resistance level of 144.27 or 145.00, but only with additional confirmation.

Alternative scenario:

If the price fixes below 140.60, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3485
• Prev. Close: 1.3587
• % chg. over the last day: +0.76%

The Canadian dollar has fallen to its lowest level against the US dollar since July 2020. The US dollar’s uptrend and falling oil prices remain the main catalysts for the Canadian dollar’s decline. On the other hand, analysts believe that when the US dollar’s uptrend reaches its end, the Canadian will be among the few currencies to reverse sharply as the Bank of Canada holds one of its highest interest rates. For the dollar index trend to end, the Fed has signaled that the end of the tightening phase is near. September forecasts suggest that the Canadian dollar may have already bottomed out against the US dollar.

Trading recommendations

• Support levels: 1.3545,1.3453,1.3297,1.3212,1.3053,1.2990,1.2958,1.2936,1.2900
• Resistance levels: 1.3662

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator is positive, there is buying pressure, but the divergence is increasing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3545. For sell deals, it is better to consider the resistance level of 1.3662, but only after the additional confirmation.

Alternative scenario:

if the price breaks down and consolidates below the 1.3297 support level, the downtrend will likely resume.