The Analytical Overview of the Main Currency Pairs on 2022.12.15

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0631
• Prev. Close: 1.0680
• % chg. over the last day: +0.46%

The US Federal Reserve raised its interest rate by 0.5% on Wednesday and raised its rate forecast to a peak of 5.1%. Thus, the Federal Reserve moved to a slower pace of rate hikes and also signaled that rates would reach higher levels than previously expected. At the Fed press conference, Mr. Powell indicated that it is too early to talk about interest rate cuts by the US central bank and that the Fed’s focus is on developing policies that will eventually return inflation to the 2% target.

Trading recommendations

• Support levels: 1.0580,1.0549,1.0483,1.0361,1.0332,1.0284,1.0193
• Resistance levels: 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, and there are signs of divergence, which, coupled with the resistance of the higher time frame, may trigger a correction. Under such market conditions, buy trades are better to consider from the support level of 1.0580 or 1.0549, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0695, 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: 1.2357
• Prev. Close: 1.2427
• % chg. over the last day: +0.56%

In the UK, the consumer inflation rate fell from 11.1% to 10.7% on an annualized basis. Core inflation (a more important indicator because it excludes food and energy prices) fell from 6.5% to 6.3% y/y. After Monday’s positive GDP data, UK Chancellor Jeremy Hunt warned that the economy might get worse before it gets better. However, yesterday’s employment data were mostly positive. The Bank of England (BoE) will meet today with the market consensus for a 50 basis point rate hike.

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 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 in the positive zone, and the buyers’ pressure remains, but there are signs of divergence. 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 since the level has already been

Alternative scenario:

if the price breaks down from 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: 135.57
• Prev. Close: 135.45
• % chg. over the last day: -0.09%

The US dollar has lost about 10% of its value against the Japanese yen over the past two months. However, the decrease was mainly due to expectations of a slowdown in the pace of rate hikes by the US Federal Reserve. The difference in the interest rates between the Bank of Japan and the US Federal Reserve became even bigger after yesterday’s rate hike, so the JPY has no fundamental support from the Bank of Japan in the mid-term perspective.

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, showing signs of divergence. Sell deals may be searched for from the resistance level of 135.90, provided that there is a reverse reaction. Buy trades are best considered on intraday time frames from the support level of 134.79, but only with confirmation since the level has already been tested.

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: 1.3545
• Prev. Close: 1.3545
• % chg. over the last day: 0.00%

Oil prices fell slightly yesterday due to a stronger dollar, and the possibility of further interest rate hikes by global central banks has also added to demand concerns. The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian currency, while falling oil leads to Canadian weakness.

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. The MACD indicator shows the divergence, which suggests that the technical correction is coming to an end. Buy trades should be considered from the support level of 1.3521, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3601 or 1.3643 but with a 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.