The Analytical Overview of the Main Currency Pairs on 2022.11.08

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 0.9901
• Prev. Close: 1.0020
• % chg. over the last day: +1.20%

Congressional Elections will be held in the US today. Many traders and investors underestimate this event, referring to it as a political one. But it should be noted that this election puts control of Congress and President Joe Biden’s agenda for the remaining two years of his term at stake. Republicans are leading in the polls, and many analysts believe the likely outcome will be a split government, with the Republican Party controlling the House and possibly the Senate in the second half of Biden’s term. If this scenario goes into effect, the US would not be able to provide financial support in an economic downturn. It would also affect the prospects for government spending, which could be reallocated to other needs. This could lead to a sharp rise in the dollar index, a fall in the European currency, and a drop in stock indices.

Trading recommendations

• Support levels: 0.9946,0.9838,0.9794,0.9755,0.9702,0.9601
• Resistance levels: 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 is trading above the moving averages. The MACD indicator is positive, but there is a divergence, indicating the weakness of the buyers. Under such market conditions, buy trades should be considered from the support level of 0.9946 or 0.9838, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0055, but with confirmation as well.

Alternative scenario:

if the price breaks down through the support level of 0.9795 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1308
• Prev. Close: 1.1512
• % chg. over the last day: +1.80%

The British pound sterling has strengthened considerably in recent days, mainly due to the decline of the dollar index. But analysts believe that the British pound now has no fundamental basis for growth. The interest rate differential between the US Federal Reserve and the Bank of England is still widening, and the British economy is already on the verge of recession. Friday’s quarterly GDP data is projected to be negative, meaning two consecutive quarters of contraction, a technical recession. The Bank of England predicts that the UK economy will contract for up to 8 consecutive quarters.

Trading recommendations

• Support levels: 1.1329,1.1230,1.1172,1.1093,1.0915,1.0817
• Resistance levels: 1.1585,1.1698,1.1816,1.1901

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. The MACD indicator is positive, and the buyers’ pressure is still present. Under such market conditions, buy trades are better to look for on intraday time frames with short targets. It is possible to consider longs from the support level of 1.1329, but a correction is needed. Sell trades are best looked for from the resistance level of 1.1585 but better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down of the 1.1231 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.17
• Prev. Close: 146.62
• % chg. over the last day: -0.38%

Japan’s Cabinet on Tuesday will approve a supplementary budget for the current fiscal year to spend 29.1 trillion yen ($199 billion) on an economical package designed to ease the pain for households and businesses from rising prices exacerbated by a weaker yen. The government will issue about 22.8 trillion yen in bonds to provide the necessary financing, further pushing back the fiscal recovery despite the fact that its debt is already more than twice the size of its economy. The government estimates that the energy-focused measures will help reduce the country’s core consumer inflation by 1.2%.

Trading recommendations

• Support levels: 146.38,145.50,144.91,144.19,143.00
• Resistance levels: 147.34,148.82,150.00,151.05

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-volatility balance is being formed. The MACD indicator is inactive. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 146.38. Sell deals can be searched from the resistance level of 147.34, 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: 1.3533
• Prev. Close: 1.3490
• % chg. over the last day: -0.32%

The Canadian dollar is a commodity currency, so it is highly dependent not only on the monetary policy of the Bank of Canada but also on the dollar index and oil prices. The oil market is very tight right now due to a variety of factors that affect it, from OPEC+ countries cutting production to G7 countries setting a restrictive price in response to Russia’s invasion of Ukraine. On the other hand, the influence of the dollar index, which is strongly confirmed by the US Federal Reserve monetary policy, plus the congressional elections will take place today, which may influence the dynamics. No wonder why the USD/CAD quotes show sharp movements to one side and to the other.

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 is bearish. The price has consolidated below the moving averages and the priority change level. The MACD indicator is negative now, but there is some buying 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 of 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.