The Analytical Overview of the Main Currency Pairs on 2022.08.05

The EUR/USD currency pair

• Prev Open: 1.0159
• Prev Close: 1.0245
• % chg. over the last day: +0.84%

An important report on US Nonfarm Payrolls will be released today. Economists expect the US economy to have added about 250,000 jobs in July, up from 372,000 the previous month. The jobs report will also serve as an overview of the likely path of monetary policy action by the Federal Reserve, as the Сentral Bank emphasized the strength of the labor market as evidence that the economy remains resilient and able to withstand further rate hikes.

• Support levels: 1.0196, 1.0112, 1.0035, 1.0000
• Resistance levels: 1.0245, 1.0264, 1.0284, 1.0365, 1.0415, 1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is still forming a wide volatile balance with the borders of 1.0112-1.0284. Buyer pressure increased significantly over yesterday. The MACD indicator became positive again. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 1.0196. Sell trades can be considered from the resistance level of 1.0245 or 1.0264, but only after additional confirmation and only with short targets.

Alternative scenario: if the price breaks down through the 1.0112 support level and fixes below, the downtrend will likely resume.

• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
• – US Unemployment Rate (m/m) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2135
• Prev Close: 1.2158
• % chg. over the last day: +0.19%

The Bank of England raised the interest rate by 0.5% as expected. The rate is now at the level of 1.75%, higher than the ECB (0.5%) but lower than the US Federal Reserve (2.5%), the Canadian central bank (2.5%), and the Reserve Bank of New Zealand (2.5%). Normally when the interest rate rises, the national rate strengthens. Still, as mentioned earlier, the rate hike scenario was already built into the price movement, so the focus was on the Bank of England statement. Having produced the largest rate hike in nearly 30 years, the Bank of England suggested that it may be less decisive in raising rates in the coming months. The report also indicated that the UK would be in recession for more than a year under skyrocketing inflation, which caused traders to sell off the British currency yesterday.

• Support levels: 1.2114, 1.2114, 1.2063, 1.1907, 1.1803
• Resistance levels: 1.2167, 1.2209, 1.2294

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is now balanced and trading between the moving averages. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy trades on the intraday time frames from the support level of 1.2114, but only with confirmation. Sell trades can be considered from the resistance level of 1.2167, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.2063 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 133.85
• Prev Close: 132.92
• % chg. over the last day: -0.70%

A Reuters poll of strategists showed that 61% of participants believe that the rise in the Japanese yen against the US dollar since mid-July has been temporary. According to analysts, the yen is unlikely to strengthen in the short term as the Bank of Japan remains the exception among global central banks with its ultra-easy monetary policy. At the same time, the US Federal Reserve raises interest rates and will not complete its increases cycle until 2023.

• Support levels: 132.85, 132.12, 131.37, 130.85
• Resistance levels: 134.05, 135.29, 136.03, 137.11

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bearish. But now the price has corrected to the average lines and is forming a balance. The MACD indicator has become inactive. Under such market conditions, buy trades can be sought from the support level of 132.85, but with additional confirmation. Resistance levels of 134.05 may be considered for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes above 135.29, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2838
• Prev Close: 1.2863
• % chg. over the last day: +0.19%

Canada’s trade surplus widened in June, but the Canadian dollar fell yesterday amid falling oil prices. The Canadian dollar is a commodity currency as oil is one of Canada’s main exports. Therefore, the Canadian currency is under pressure as a wave of sales has swept the crude oil markets. With crude oil inventories rising as the summer auto season draws close, investors are betting that oil prices could fall further in the coming months, negatively affecting the Canadian (USD/CAD rise).

• Support levels: 1.2832, 1.2803, 1.2786
• Resistance levels: 1.2871, 1.2929, 1.3006, 1.3085, 1.3154

In terms of technical analysis, the USD/CAD currency pair trend is bearish. At the moment, the price is forming a wide balance. The MACD indicator became positive, and there was an initiative of buyers. Under such market conditions, it is better to consider sell deals from the resistance level of 1.2871 but with confirmation. Buy trades should be considered on the lower time frames from the support level of 1.2832, but only with confirmation and short targets.

Alternative scenario: if the price breaks out and consolidates above the 1.2929 resistance level, the uptrend will likely resume.

• – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+3).