The Analytical Overview of the Main Currency Pairs on 2022.08.16

The EUR/USD currency pair

• Prev Open: 1.0253
• Prev Close: 1.0159
• % chg. over the last day: -0.92%

The situation on the EUR/USD currency pair remains the same. The European currency will be under pressure in the coming weeks since the difference in the interest rates (US Fed – 2.5%, ECB – 0.5%) plays in favor of the EURUSD quotes decrease. The economic indicators in the Eurozone are getting worse, the energy crisis is also worsening, and inflation in European countries shows no signs of slowing down. The Eurozone is slowly but steadily sliding into recession.

• Support levels: 1.0112, 1.0035, 1.0000
• Resistance levels: 1.0185, 1.0230, 1.0286, 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 has changed to bearish. The price confidently broke through the priority change level and consolidated below the moving averages. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 1.0112, but with confirmation in the form of a reverse initiative. Sell trades can be considered from resistance levels of 1.0185 or 1.0230, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0286 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2123
• Prev Close: 1.2053
• % chg. over the last day: -0.58%

Many important labor market statistics will be published today in the UK. Strong data may support the British currency on expectations of a more aggressive rate hike from the Bank of England. Conversely, the labor market’s weakness will force the Bank of England to revise the rate hike from 50bp to 25bp, which will surely provoke a wave of sell-off in GBPUSD.

• Support levels: 1.2000
• Resistance levels: 1.2065, 1.2103, 1.2167, 1.2215, 1.2294

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame has changed to bearish. The price has now consolidated below the average lines and has broken down the priority change level. The MACD indicator has turned negative, and the sellers’ pressure remains, but there are signs of divergence. At the moment, it is better to look for buy trades on the intraday time frames from the support level of 1.2000, but only with a confirmation. Sell trades can be considered from the resistance level of 1.2065 or 1.2103, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.2215 resistance level and fixes above, the uptrend will likely resume.

• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 133.41
• Prev Close: 133.29
• % chg. over the last day: -0.09%

On Monday, Japanese Prime Minister Fumio Kishida instructed officials to develop an additional package of steps by early September to ease consumers’ pain from rising wheat and energy import prices amid the war in Ukraine. The government will fight rising inflation, the first hint that the Bank of Japan may abandon its soft monetary policy. While the package is still being worked out, the interest rate differential (US Fed – 2.5%, Bank of Japan -0.10%) will favor a further rise in USD/JPY quotes. However, it is already seen that JPY is more stable against the USD than other currencies, so investors should keep a close eye on the actions of the BoJ.

• Support levels: 132.27, 131.08, 130.85
• Resistance levels: 134.36, 136.02, 137.12

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish. The price has formed an accumulation zone above the 134.36 level, so a test of this zone is very likely. The price is currently trading in a narrow direction. Under such market conditions, buy trades can be sought from the support level of 132.27, but with additional confirmation. For sell deals, it is possible to consider the level of resistance 134.36, but only with additional confirmation in the form of a reverse initiative, as fundamentally, USD/JPY quotes are inclined to grow.

If the price fixes below 131.37, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2770
• Prev Close: 1.2901
• % chg. over the last day: +1.02%

Canada will release consumer price data for July today. Analysts forecast inflation to remain about the same, with a possible 0.1% increase. Thus, strategists expect a slowdown in inflation as in the United States. If that happens, the Canadian dollar might get into a sell-off amid expectations that the Bank of Canada will be forced to be less aggressive in raising interest rates. Moreover, a decrease in oil prices negatively affects the Canadian currency.

• Support levels: 1.2817, 1.2761
• Resistance levels: 1.2927, 1.2965

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price has steadily consolidated above the level of change of priority and above the moving averages. The MACD indicator has become positive, but the buyers’ pressure remains. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2817, but only with confirmation and short targets. It is better to consider the resistance level of 1.2927 for sell deals, but with confirmation because the level has already been tested.

Alternative scenario: if the price breaks down and consolidates below the 1.2761 support level, the downtrend will likely resume.

• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3).