The Analytical Overview of the Main Currency Pairs on 2022.11.07

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9748
• Prev. Close: 0.9957
• % chg. over the last day: +2.14%

The US labor market data on Friday showed that Nonfarm payrolls added 261,000 jobs last month against expectations of 197,000, but the overall unemployment rate jumped from 3.5% to 3.7%. The US dollar fell sharply on this statistic as rising unemployment is the last piece of the puzzle for the Fed to put the brakes on aggressive rate hikes. A slowdown in the rate hikes is a negative for the dollar index and a positive for the European currency.

Trading recommendations

• Support levels: 0.9850,0.9794,0.9755,0.9702,0.9601
• Resistance levels: 0.9966,1.0055,1.0111,1.0162,1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price failed to break down through the priority change level on Friday. The MACD indicator became positive, and the buying pressure returned. Under such market conditions, buy trades should be considered from the support level of 0.9850 or 0.97994, but with additional confirmation. Sell deals can be considered from the resistance level of 0.9966, but also with confirmation, as the level has already been tested.

Alternative scenario:

if the price breaks down through the support level of 0.9755 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1159
• Prev. Close: 1.1372
• % chg. over the last day: +1.91%

The Bank of England hiked its interest rate sharply by 0.75% last Thursday as it struggles with risks associated with the inflation of more than 10% and also warned of a prolonged recession. The Bank of England predicts that inflation will hit a 40-year high of about 11% in the current quarter and pointed out that Britain has already entered a recession that could potentially last two years – longer than during the 2008-09 financial crisis.

Trading recommendations

• Support levels: 1.1230,1.1172,1.1093,1.0915,1.0817
• Resistance levels: 1.1450,1.1578,1.1698,1.1816,1.1901

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 above the moving averages and above the priority change level. The MACD indicator has become positive, and buying pressure has returned to the market. Under such market conditions, buy trades can be considered from the support level of 1.1230, but better after confirmation. Sell trades are best to look for on intraday time frames. The nearest resistance level is 1.1450, 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: 148.21
• Prev. Close: 146.65
• % chg. over the last day: -1.06%

The situation on the currency pair USD/JPY remains the same. The Bank of Japan keeps an ultra-soft monetary policy and does not plan to change it until spring 2023. The US Federal Reserve, in turn, is on an interest rate hike cycle. This divergent policy strengthens the dollar and weakens the Japanese yen, pushing the USD/JPY up. Even if the US Fed cuts the pace of its rate hikes, the interest rate differential will still rise, resulting in further gains, but maybe slower than before.

Trading recommendations

• Support levels: 146.37,145.50,144.91,144.19,143.00
• Resistance levels: 147.59,148.82,150.00,151.05

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, and a wide balance is forming. The MACD indicator has become negative again, but sellers’ pressure is weak. Under such market conditions, buy trades can be looked for on intraday time frames from the support level of 146.37. Sell deals can be looked for from the resistance level of 147.59 or 148.82, but only with additional confirmation since 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: 1.3745
• Prev. Close: 1.3479
• % chg. over the last day: -1.97%

Canadian labor market data on Friday pointed to job growth, raising the possibility that the Bank of Canada will need to make another excessive interest rate hike at its meeting next month. The money markets are now leaning towards the Bank of Canada raising its policy rate by 0.5% on December 7. The Bank of Canada’s discount rate is expected to peak at 4.5% in early 2023.

Trading recommendations

• Support levels: 1.3486,1.3400
• Resistance levels: 1.3608,1.3682,1.3776,1.3855,1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bearish again. The price confidently broke through and consolidated below the moving averages and the priority change level. The MACD indicator is negative now, and there is the seller’s pressure on the lower time frames. The best way to sell is to consider the resistance level of 1.3608, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level 1.3486, but with additional confirmation.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3682, the uptrend will likely resume.