The Analytical Overview of the Main Currency Pairs on 2022.11.01

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9964
• Prev. Close: 0.9881
• % chg. over the last day: -0.84%

The annual inflation rate in the Eurozone reached 10.7%, against expectations of growth of 10.3%. The core consumer price level, which excludes food and energy prices, rose to 5.0% from 4.8%. Eurozone GDP growth slowed in the third quarter, with business activity indices suggesting further declines. Energy prices continue to drive inflation, adding 4.2% to overall inflation in October. Meanwhile, inflation expectations for 2023 have also risen. All this indicates that it is too early for the ECB to slow down the pace of monetary policy tightening, and it is likely that Europe’s Central Bank will again have to aggressively raise interest rates by 0.75% at its next meeting. And that will slow down business activity in the region even more.

Trading recommendations

• Support levels: 0.9873,0.9835,0.9755,0.9601
• Resistance levels: 0.9924,1.0055,1.0111,1.0162,1.0230

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 at the level of the moving averages, but the correction is close to the end. The MACD indicator is in the negative zone, but sellers’ pressure is weak due to the presence of divergence. Under such market conditions, buy trades should be considered from the support level 0.9873, but with additional confirmation, as the level has already been tested. Sell deals can be considered from the resistance level of 0.9924, 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: 1.1616
• Prev. Close: 1.1465
• % chg. over the last day: -1.32%

The pound fell by 1.3% against the dollar yesterday. The Bank of England is likely to raise rates by 75 basis points at Thursday’s meeting, although analysts say long-term rate expectations are under continued pressure. Bank of England deputy governor Ben Broadbent suggested that the cost of borrowing, as assessed by investors, would hit the UK economy. Noting that, he doubted that the UK could do a “soft landing” or, in other words, bring inflation back to the target level without significantly damaging the real economy.

Trading recommendations

• Support levels: 1.1466,1.1337,1.1172,1.1093,1.0915,1.0817
• Resistance levels: 1.1578,1.1698,1.1816,1.1901

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 at the level of the moving averages. The MACD indicator is negative, but there is still buying pressure. Under such market conditions, buy trades can be considered from the support level of 1.1466 or 1.1337, but better after confirmation. Sell trades are best sought on intraday time frames, the nearest resistance level is 1.1578, 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: 147.41
• Prev. Close: 148.75
• % chg. over the last day: +0.90%

Japan’s Finance Ministry said Monday that it spent a record $42.8 billion in currency intervention in October to support the yen. The currency intervention has temporarily strengthened the Japanese currency. Still, the fundamental picture remains the same: the Bank of Japan does not intend to abandon its soft monetary policy until spring 2023, while the US Federal Reserve is in a cycle of tightening and rising interest rates. Even if the US Fed cuts the pace of increases, the interest rate differential will still widen, putting negative pressure on the yen.

Trading recommendations

• Support levels: 147.99,146.64,145.50,144.91,144.19,143.00
• Resistance levels: 148.82,147.75,148.64,148.64,150.00,151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading at the level of the moving averages. The MACD indicator has become positive, but the buyers’ pressure is decreasing. Under such market conditions, traders can look for buy trades on the intraday time frames from support at 147.99 or 146.64, but only after the confirmation. Sell deals can be sought from the resistance level of 148.82, but only with additional confirmation, as the level has already been tested.

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: 1.3605
• Prev. Close: 1.3619
• % chg. over the last day: +0.10%

The Canadian dollar is a commodity currency and is highly dependent on the movements of the dollar Index as well as oil price movements. Monthly government data showed that US oil production rose to nearly 12 million BPD in August, the highest since the COVID-19 pandemic. With new blockages in China indicating weak demand, oil prices are declining, negatively affecting the Canadian dollar. But analysts’ medium-term forecasts suggest that oil prices will rise as OPEC+ will cut production in November. This could give a boost to the Canadian dollar, but it should be noted that a substantial increase in energy prices could trigger a new round of higher inflation.

Trading recommendations

• Support levels: 1.3542,1.35000,1.3454
• Resistance levels: 1.3610,1.3597,1.3679,1.3795,1.3855,1.3968.

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading at the level of moving averages, wide-volatility balance is formed. The MACD indicator has become negative, there is slight seller pressure. For sell deals, it is best to consider the resistance level of 1.3609, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level of 1.3542, but it is also better after confirmation.

Alternative scenario:

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