The Analytical Overview of the Main Currency Pairs on 2022.10.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9964
• Prev. Close: 1.0078
• % chg. over the last day: +1.14%

The European Central Bank will hold its monetary policy and interest rate meeting today. The analyst expects the ECB to raise the interest rate by 0.75%, although some European leaders stressed the risk of recession and suggested not to sharply increase the cost of borrowing in the Eurozone. Also today, the US will release data for the third quarter, where analysts expect to see a growth of 2.3%. Falling GDP figures may cause a surge in volatility as it will be a sign of a slowing economy, forcing policymakers to be less aggressive in the interest rate hike cycle. Still, it will be positive for the euro.

Trading recommendations

• Support levels: 1.0032,0.9969,0.9873,0.9835,0.9755,0.9601
• Resistance levels: 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 is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and the buyers’ pressure remains. Under such market conditions, buy trades should be considered from the support level of 1.0032 or 0.9969, but with additional confirmation in the form of reverse initiative. Sell deals may be considered from the resistance level of 1.0111, but also with confirmation.

Alternative scenario:

if the price breaks down through the support level of 0.9834 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1463
• Prev. Close: 1.1615
• % chg. over the last day: +1.33%

The pound sterling continued its rally against the US dollar, rising more than 4% for the week as political uncertainty in the UK dissipated. The new British Prime Minister, Rishi Sunak, postponed the announcement of the financial plan from October 31 to 17. Details of the budget have not yet been released, but Rishi Sunak confirmed that fighting inflation will be the government’s focus. Economic stability and restoring confidence will also be a priority.

Trading recommendations

• Support levels: 1.1382,1.1338,1.1172,1.1093,1.0915,1.0817
• 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 is bullish. The price is trading above the levels of the moving averages. The MACD indicator is in the positive zone, there is still buying pressure, but the first signs of divergence have appeared, which indicates that the growth is limited. Under such market conditions, buy trades can be considered from the support level of 1.1467 or 1.1337, but better after confirmation. Sell trades are best sought on intraday time frames. The nearest resistance level is 1.1698, but also better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.98
• Prev. Close: 146.38
• % chg. over the last day: -1.09%

The strengthening of the Japanese Yen in recent days is mainly due to a decrease in the dollar index amid rumors that the US Federal Reserve should be less aggressive in its interest rate hike cycle to prevent a steep decline in economic indicators and GDP. But investors should keep in mind that the Bank of Japan and the US Fed are still looking the other way. The Bank of Japan is pursuing a soft monetary policy, while the US Fed is in a tightening cycle. And the situation has stayed the same, even despite the currency interventions, so analysts do not recommend investors sell Japanese currency prematurely. Experts point out that in April 2023, the second five-year term of Governor Haruhiko Kuroda expires, which offers the prospect of a gradual withdrawal of his radical economic stimulus program.

Trading recommendations

• Support levels: 144.91,144.19,143.00
• Resistance levels: 148.79,147.75,148.64,148.64,150.00,151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bearish. The price has consolidated below the priority change level and is trading below the moving averages. The MACD indicator has become negative, and there is slight seller pressure, but there are also signs of weakness in the form of divergence. Under such market conditions, buy trades can be looked for on intraday time frames from the 144.91 or 144.19 support level. Sell trades can be looked for from the 146.79 resistance level, but only with additional confirmation.

Alternative scenario:

If the price fixes above 150.00, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3610
• Prev. Close: 1.3554
• % chg. over the last day: -0.41%

The Bank of Canada raised its interest rate by 0.5% to 3.75%, which came as a surprise to analysts, as most had expected a move of 0.75%. At a press conference, Bank of Canada Governor Tiff Macklem said higher interest rates are starting to curb economic growth. This is increasingly evident in areas of the economy that are sensitive to interest rates, such as housing and household spending. Thus, the Bank of Canada is beginning to be more cautious in its rate hike cycle, and it is highly likely that the rest of the central banks will have to do the same, or a global recession is inevitable.

Trading recommendations

• Support levels: 1.3535,1.3454
• Resistance levels: 1.3678,1.3795,1.3855,1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price has consolidated below the priority change level and is trading below the moving averages. The MACD indicator is in the negative zone, but there is a divergence, which indicates the weakness of the sellers. The best way to sell is to consider the resistance level of 1.3678, but only after the additional confirmation in the form of reverse initiative. Buy trades should be considered on the lower time frames from the support level of 1.3534, but it is better after confirmation.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3855, the uptrend will likely resume.