The Analytical Overview of the Main Currency Pairs on 2022.12.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0531
• Prev. Close: 1.0632
• % chg. over the last day: +0.96%

The US consumer inflation rate declined from 7.7% to 7.1% year-over-year. Core inflation (which excludes food and energy prices) also fell from 6.3% to 6.1%. Germany’s inflation rate fell from 10.4% to 10% year-over-year. On the back of such a sharp decline in inflation, investors renewed their interest in risky assets, which led to a sharp drop in the dollar against major currency pairs.

Trading recommendations

• Support levels: 1.0580,1.0549,1.0483,1.0361,1.0332,1.0284,1.0193
• Resistance levels: 1.0657,1.0695

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator has become overbought, but there are no signs of divergence yet. Under such market conditions, it is best to wait for a small correction. It is better to consider the deals to buy from the support level of 1.0580 or 1.0549, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0657 or 1.0695, but it is better with a confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0446 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2260
• Prev. Close: 1.2364
• % chg. over the last day: +0.84%

The UK will publish inflation data today, giving clues as to what interest rate hike the Bank of England will choose on Thursday. Analysts forecast a decline in consumer inflation from 11.1% to 10.9% year-over-year. Core inflation is expected to remain unchanged. If the data coincides with the consensus forecast or is better, the Bank of England will likely raise the interest rate by 0.50% tomorrow. If the data is worse than expected and inflation shows no signs of slowing down, the Bank of England might take a more aggressive step of 0.75%.

Trading recommendations

• Support levels: 1.2320,1.2177,1.2024,1.1964,1.1684,1.1476,1.1418
• Resistance levels: 1.2431,1.2519

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and buyers’ pressure is still present. Under such market conditions, it is better to look for buy deals from the support level of 1.2320, but with confirmation on intraday time frames. Sell trades are best looked for from the resistance level of 1.2431, but also better with confirmation in the form of a reverse initiative or a false breakout, as the level has already been tested.

Alternative scenario:

if the price breaks down of the 1.2100 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 137.66
• Prev. Close: 135.57
• % chg. over the last day: -1.54%

Japanese producer sentiment worsened in the final quarter of 2022 to its lowest level in almost two years. The reasons are price pressures and the prospect of slower global demand. The study found that both large manufacturers and the service sector expect business conditions to deteriorate further. Because of this, large firms expect to increase capital spending by 19.2% in the current fiscal year. The decline in economic indicators signifies that the Bank of Japan will continue to pursue a soft stimulative economy.

Trading recommendations

• Support levels: 134.79,133.53
• Resistance levels: 135.90,137.18,139.09,140.75,143.17,145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone, and there are signs of oversold, but without any signs of divergence. Sell deals may be sought from the resistance level of 139.09, provided that there is a reverse reaction. Buy trades are best considered on intraday time frames from the support level of 137.13, but only with confirmation.

Alternative scenario:

If the price fixes above 139.00, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3637
• Prev. Close: 1.3543
• % chg. over the last day: -0.69%

The oil price surpassed $80 a barrel on Tuesday and recorded its biggest daily gain in more than a month as investors bought up risky assets after US data pointed to a slowdown in inflation. A weaker dollar makes oil cheaper for holders of other currencies, which could boost demand. The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian currency.

Trading recommendations

• Support levels: 1.3521,1.3438,1.3386,1.3360,1.3281,1.3212
• Resistance levels: 1.3601,1.3643,1.3690,1.3776,1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. But sellers prevail inside the day. The price is trading below the moving averages, and the MACD indicator has become negative. Buy trades should be considered from the support level of 1.3521, but with additional confirmation. For sell deals, it is best to consider the resistance level of 1.3601 or 1.3643, but with confirmation in the form of a reverse initiative or after a false breakout.

Alternative scenario:

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