The Analytical Overview of the Main Currency Pairs on 2022.08.23

The EUR/USD currency pair

• Prev Open: 1.0035
• Prev Close: 0.9942
• % chg. over the last day: -0.93%

The dollar index continues to strengthen as several Federal Reserve officials reiterated an aggressive stance on monetary policy tightening ahead of the Fed’s symposium in Jackson Hole. As investors are now clearly expecting a relatively hawkish message from Fed Chairman Jerome Powell in Jackson Hole on Friday, there is a sell-off in risky assets and a buy of defensive ones. The euro is also negatively affected by the energy crisis in Europe. As a result, the euro fell to a 20-year low yesterday.

• Support levels: 0.9806
• Resistance levels: 0.9990, 1.0112, 1.0146, 1.0230, 1.0286, 1.0365

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The euro continues to lose ground. The MACD indicator is in the negative zone, and sellers’ pressure is still high. Under such market conditions, it is better to look for buy trades on the intraday time frames from the support level of 0.9806, but with a confirmation in the form of reverse initiative. Sell trades can be considered from resistance levels of 0.9990, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0146 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone French Manufacturing PMI (m/m) at 10:15 (GMT+3);
• Eurozone French Services PMI (m/m) at 10:15 (GMT+3);
• – Eurozone Germany Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Germany Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1816
• Prev Close: 1.1764
• % chg. over the last day: -0.44%

The pound sterling and inflation rates have fallen to record levels due to the UK energy crisis. The British currency against the dollar fell to its lowest level since March 2020. Traders are increasingly concerned about a prolonged decline in energy supplies, exacerbating inflation, which is already at its highest level in decades. The UK also faces uncertainty over government policy as a new prime minister will be elected next month. Weak PMI data today could further exacerbate the sell-off in the pound. HSBC Bank Plc expects the British currency to trade at $1.16 in the first quarter of 2023.

• Support levels: 1.1659
• Resistance levels: 1.1801, 1.1903, 1.2000, 1.2035, 1.2167, 1.2215, 1.2294

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages, indicating selling pressure. The MACD indicator has become negative, but there are signs of divergence. At the moment, it is better to look for sell trades from the resistance level of 1.1801, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1659, but only with confirmation.

Alternative scenario: if the price breaks out through the 1.2006 resistance level and fixes above, the uptrend will likely resume.

• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 136.85
• Prev Close: 137.49
• % chg. over the last day: +0.47%

The USD/JPY quotes are trading near a 52-week high. The growth of the dollar index against the background of the US Federal Reserve’s tightening of the monetary policy on the one hand and the adaptive soft monetary policy of the Bank of Japan, on the other hand, contribute to the growth of USD/JPY quotes. The Business Activity Index in the manufacturing and services sectors dropped below 50, indicating a serious slowdown in business processes in Japan.

• Support levels: 135.89, 135.35, 134.23, 133.47, 132.27, 131.08, 130.85
• Resistance levels: 137.43, 138.25

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The USD/JPY quotes continue to grow steadily, breaking through all the resistance levels. Under such market conditions, buy trades can be sought from the support level of 135.89, but with additional confirmation. For sell deals, it is possible to consider the resistance level of 137.43. Still, only with additional confirmation in the form of a reverse initiative, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 135.35, the downtrend will likely resume.

• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2981
• Prev Close: 1.3052
• % chg. over the last day: +0.55%

The Canadian dollar is under pressure as the dollar index rises and oil prices plummet. The Canadian dollar is a commodity currency, so it depends not only on the decision of the Canadian Central Bank but also on oil prices. Fears that Iranian oil may return to the world market have caused crude oil prices to approach six-month lows on Monday.

• Support levels: 1.3006, 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.3090, 1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator is in the positive zone, and the buyers’ pressure remains, but there are signs of divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3006, but only with confirmation. For sell deals, it is better to consider the resistance level of 1.3105 but also with a confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down and consolidates below the 1.2903 support level, the downtrend will likely resume.