The Analytical Overview of the Main Currency Pairs on 2022.10.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9824
• Prev. Close: 0.9983
• % chg. over the last day: +1.62%

The Eurozone Producer Price Index, which measures the inflation rate between businesses and factories, reached an annualized rate of 5% in August, up from 4% in July. The biggest price increase was seen in the energy sector, plus 11.8%, while consumer goods rose by 0.8%. In her speech yesterday, ECB head Christine Lagarde said she did not know whether Eurozone inflation had peaked and was not ready to predict when that peak would be. So, the ECB will only rely on actual data and will gradually raise the interest rate until inflation starts to slow down.

Trading recommendations

• Support levels: 0.9845,0.9748,0.9666.
• Resistance levels: 0.9965,1.0111,1.0162,1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. Yesterday, the price broke through the priority change level and consolidated higher. The MACD indicator is positive, the price is trading above the average lines, and the buyer’s pressure remains high. Buy trades should be considered after a small pullback, as the price is overbought now and has strongly deviated from the middle lines. Sell deals can be considered from the resistance level of 1.0111, but only with confirmation.

Alternative scenario:

if the price breaks down through the support level of 0.9666 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1317
• Prev. Close: 1.1467
• % chg. over the last day: +1.33%

The pound/dollar exchange rate is back above 1.14, extending a six-day recovery. Fiscal changes in the UK have had a fairly broad impact on global risk attitudes and likely contributed to a rebound in risk assets and bonds. But analysts believe that, given geopolitical developments in Europe and the energy crisis, it is “too early to rejoice” as winter is ahead. Experts believe that fundamentally, the euro and the pound are still inclined to fall, so any rebound should be used to look for sell deals.

Trading recommendations

• Support levels: 1.1281,1.1121,1.0915,1.0816,1.0711,1.03
• Resistance levels: 1.1478,1.1693,1.1816,1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to bullish. The price has broken through the priority change level and is confidently trading above the moving averages. The MACD indicator remains positive, but the divergence is present. Under such market conditions, buy trades can be considered from the support level of 1.1281, but only with confirmation. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1478, but it is also better with confirmation because the entry is against the main movement.

Alternative scenario:

if the price breaks down from the 1.0709 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 144.50
• Prev. Close: 144.14
• % chg. over the last day: -0.25%

Japanese government bond yields fell sharply on Tuesday, following Treasury yields, which fell amid weaker-than-expected US manufacturing data. In a research note, Nomura Securities analyst predicted that the Bank of Japan (BOJ) is likely to loosen its yield curve control (YCC) policy next July, allowing 10-year bond yields to reach 0.4% or 0.5%. Right now, the BOJ is keeping the 10-year yield below 0.25%. In other words, once the BoJ starts to revise its policy, the Japanese yen could gain fundamental support.

Trading recommendations

• Support levels: 143.00,140.60,139.61,138.78,137.65,136.80,135.20
• Resistance levels: 144.66,145.35

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The MACD indicator has become negative, and the price is trading below the moving averages. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 143.00, but with confirmation. Sell deals can be sought from the resistance level of 144.66, 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: 1.3618
• Prev. Close: 1.3508
• % chg. over the last day: -0.81%

The Canadian dollar strengthened sharply yesterday as the dollar index fell. CAD confidence was boosted by oil, which jumped by 3%, ahead of the OPEC+ meeting. The meeting will take place today, and OPEC+ countries will consider cutting their quota by 1-2 million BPD to support oil prices. If the OPEC+ countries do cut production, this move will drastically reduce supply in the oil market, but the Canadian dollar will only benefit from this as it is a commodity currency.

Trading recommendations

• Support levels: 1.3454,1.3297,1.3212,1.3053,1.2990,1.2958
• Resistance levels: 1.3660,1.3755,1.3858,1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bearish. The MACD indicator became negative, and the price is trading below the moving lines. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3454, but with confirmation. For sell deals, it is better to consider the resistance level of 1.3660 or 1.3756, but only after the additional confirmation.

Alternative scenario:

if the price breaks out through and consolidates above the resistance level of 1.3756, the uptrend will likely resume.