The Analytical Overview of the Main Currency Pairs on 2022.11.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0392
• Prev. Close: 1.0364
• % chg. over the last day: -0.27%

The Eurozone’s annual inflation rate decreased from 10.7% to 10.6%. Core Inflation (excluding food and fuel prices) remained at 5% y/y. The data points to a possible peak in inflation. This increases the likelihood that the ECB will raise interest rates by 0.5% at its next meeting rather than by 0.75%, as previously discussed. ECB spokesman Lane said yesterday that the ECB expects inflation to fall next year but also noted the importance of further interest rate hikes.

Trading recommendations

• Support levels: 1.0193,1.0092,1.0043,0.9812
• Resistance levels: 1.0384,1.0504

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 moving averages, the MACD indicator has become inactive, and the price is trading in a narrow price range. For buy deals, it is best to wait for a corrective movement to the support levels of 1.0193 or 1.0092, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0384 inside the day, but it is also better with confirmation in the initiative on the lower time frames.

Alternative scenario:

if the price breaks down through the support level of 0.9993 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1913
• Prev. Close: 1.1863
• % chg. over the last day: -0.42%

On Thursday, the UK government unveiled a £55 billion ($66 billion) budget plan aimed at closing the hole in public finances and restoring confidence in the British economy. These measures will increase financial hardship for millions of Britons, who are facing the country’s worst cost-of-living crisis in decades and its longest recession. Jeremy Hunt pointed out that these measures are necessary to curb inflation, which has reached a 41-year high and restore Britain’s reputation.

Trading recommendations

• Support levels: 1.1684,1.1476,1.1418,1.1172,1.1093,1.0915,1.0817
• Resistance levels: 1.1921

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading at the level of the moving averages. The MACD indicator has become inactive, and the divergence indicates weakness and a possible correction. Under such market conditions, it is better to look for buy deals after a slight correction to the support levels of 1.1684 or even 1.1476. Sell trades are best sought on intraday time frames from the resistance level of 1.1921.

Alternative scenario:

if the price breaks down of the 1.1418 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 139.46
• Prev. Close: 140.21
• % chg. over the last day: +0.53%

Japan’s nationwide core consumer price index rose to a 40-year high from 3% to 3.6%, with an expectation of 3.5%. But despite the fact that the inflation rate has already exceeded the BoJ’s inflation target of 2% for the seventh time, the BoJ governor was quick to release a statement that an interest rate hike is undesirable at the moment. Thus, due to the divergent monetary policies of the Japanese banks and the US Federal Reserve, USD/JPY quotes are still inclined to rise.

Trading recommendations

• Support levels: 139.44,137.65,136.80
• Resistance levels: 141.05,143.17,145.16,146.06,147.34,148.82,150.00

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 inactive again, indicating the uncertainty of the market participants. The price is flying in a narrow corridor, which makes it difficult to find good entry points. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 139.44, but only with confirmation. Sell deals can be searched from the resistance level of 141.05, provided there is a reversal or a false breakout.

Alternative scenario:

If the price fixes above 146.06, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3324
• Prev. Close: 1.3326
• % chg. over the last day: +0.02%

Higher interest rates have driven up the cost of credit in Canada, with mortgage rates up 11.4% for the year, the largest increase since February 1991. This, combined with higher rents, helped raise housing rates. The Bank of Canada raised its prime rate by 350 basis points from March to 3.75%, one of the fastest tightening cycles on record. Money markets are betting mainly on a 25 bps hike at the Bank of Canada’s next meeting on Dec. 7.

Trading recommendations

• Support levels: 1.3281,1.3212
• Resistance levels: 1.3508,1.3608,1.3682,1.3776,1.3855,1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. But inside the day, there is a slight dominance of buying. The MACD indicator has become inactive again, and the price is trading at the level of moving averages. The best way to sell is to consider the resistance level of 1.3508, but with confirmation. Buy trades should be considered on the lower time frames from the support level of 1.3281, but with additional confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3508, the uptrend will likely resume.