The Analytical Overview of the Main Currency Pairs on 2022.12.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0529
• Prev. Close: 1.0492
• % chg. over the last day: -0.35%

Europe’s Central Bank is likely to raise its interest rate by 0.5% this month, according to Gabriel Makhlouf of the ECB Governing Council. Makhlouf considers the half-point move the “minimum necessary” to keep inflation moving back toward the 2% target. Makhlouf also believes that Europe is likely to suffer a “technical recession” this quarter and in the first three months of 2023, but rate hikes should continue.

Trading recommendations

• Support levels: 1.0478,1.0446,1.0361,1.0332,1.0284,1.0193
• Resistance levels: 1.0543,1.0610

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, and the MACD indicator is in the negative zone but with sellers’ pressure. Buy trades are best considered from support levels of 1.0478 or 1.0361, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0543, but it is better with confirmation in the form of reverse initiative.

Alternative scenario:

if the price breaks down through the support level of 1.0332 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2286
• Prev. Close: 1.2194
• % chg. over the last day: -0.75%

According to analysts, the economic outlook for the UK remains murky, and the recent rise in the British pound has more to do with a drop in the dollar index and improved investor sentiment ahead of the holidays. Experts believe that high inflation could theoretically reduce holiday season sales as households prioritize purchases of necessities. However, market sentiment indicates that about 60% of traders hold short positions in GBP, which is why the decrease in quotes is limited.

Trading recommendations

• Support levels: 1.2127,1.2016,1.1964,1.1684,1.1476,1.1418
• Resistance levels: 1.2254,1.2381,1.2431

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 below the moving levels. The MACD indicator is in the negative zone, and there is a slight sellers’ pressure inside the day. Under such market conditions, it is better to look for buy deals from the support level of 1.2127, but with confirmation. Sell trades are best sought on intraday time frames from resistance levels of 1.2254, but also better with confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario:

if the price breaks down of the 1.1965 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 134.55
• Prev. Close: 136.75
• % chg. over the last day: +1.63%

The decline in the USD/JPY last month was mainly due to the weakness of the dollar rather than the strength of the Japanese currency. The interest rate differential between the US Fed and the Bank of Japan is huge and continues to widen with each Fed meeting. An increase in rates tends to result in higher government bond yields and an appreciation of the national currency. In the medium term, the fundamental forecast on the currency pair USD/JPY remains bullish.

Trading recommendations

• Support levels: 135.11,133.53
• Resistance levels: 137.65,139.09,140.75,143.17,145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the positive zone. Within the day, buying starts to prevail. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 135.11, but only with confirmation. Sell deals can be sought from the resistance level of 137.65, provided that there is a reverse reaction.

Alternative scenario:

If the price fixes above 139.08, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3456
• Prev. Close: 1.3587
• % chg. over the last day: +0.97%

The Canadian dollar is a commodity currency and depends not only on the monetary policy of the Bank of Canada but also on the dynamics of the dollar index and oil prices. Europe’s ban on Russian oil and price controls led to a sharp drop in oil on Monday. As a result, the USD/CAD quotes went up, and this dynamic might continue in the midterm unless the OPEC+ countries decide to cut oil production in order to limit supply.

Trading recommendations

• Support levels: 1.3520,1.3438,1.3386,1.3360,1.3281,1.3212
• Resistance levels: 1.3602,1.3658,1.3682,1.3776,1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and the buyers’ pressure prevails. Buy trades should be considered after a slight pullback from the support level of 1.3520, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3602 or 1.3658, but with confirmation in the form of reverse initiative.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.