The Analytical Overview of the Main Currency Pairs on 2022.08.24

The EUR/USD currency pair

• Prev Open: 0.9939
• Prev Close: 0.9967
• % chg. over the last day: +0.28%

The US manufacturing PMI fell to 51.3 from 52.2 in August, while the services sector declined to 44.1 from 47.3, the lowest level since February 2021. Eurozone data is slightly better but also showed a downward trend. Thus, the index of business activity in the manufacturing sector of the Eurozone decreased from 49.8 to 49.7, and the services sector decreased from 51.2 to 50.2. Falling below the 50 bps level is the first sign that the economy is on the recession threshold.

• Support levels: 0.9949
• Resistance levels: 0.9996, 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. But yesterday, the price showed a bullish impulse, forming an accumulation zone below. The MACD indicator has become inactive, and the sellers’ pressure is still high, but the divergence is observed. In such market conditions, it is better to look for buy trades on the intraday time frames from the support level of 0.9996, but with confirmation. Sell trades can be considered from resistance levels of 0.9956, 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.

• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1761
• Prev Close: 1.1830
• % chg. over the last day: +0.59%

The UK manufacturing PMI fell sharply from 52.1 to 46. The decline was less painful in the service sector, from 52.6 to 52.5. The sharp slowdown in manufacturing is a direct consequence of the energy crisis in the country. According to JPMorgan Private Bank, the pound risks falling to 1.14 against the dollar if the winter gas supply crisis pushes the UK into recession.

• Support levels: 1.1786, 1.1659
• Resistance levels: 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. Now the price has formed an accumulation zone with a bullish impulse, where traders can look for buy deals. The MACD indicator has become positive, and sellers’ pressure has decreased slightly, though the main priority is still downward. At the moment, it is better to look for sell deals from the resistance level of 1.1903, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1786, but only with confirmation and short targets.

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

The USD/JPY currency pair

• Prev Open: 137.43
• Prev Close: 136.74
• % chg. over the last day: -0.50%

The Japanese yen gained some strength yesterday due to the dollar decline. But investors shouldn’t consider this movement as a full trend reversal, as fundamentally, the Japanese yen is getting cheaper due to the soft, adaptive policy of the Bank of Japan, while the US Federal Reserve conducts an aggressive tightening policy.

• Support levels: 135.89, 135.35, 134.23, 133.47, 132.27, 131.08, 130.85
• Resistance levels: 137.03, 137.43, 138.25

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Yesterday, USD/JPY quotes were corrected to the moving averages’ levels. Under such market conditions, buy trades can be sought from the support level of 135.35, but with additional confirmation. For sell deals, traders can consider the resistance level of 137.03, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

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

The USD/CAD currency pair

• Prev Open: 1.3045
• Prev Close: 1.2957
• % chg. over the last day: -0.67%

The Canadian dollar strengthened considerably yesterday due to a decline in the dollar index and an increase in oil prices. Oil prices jumped more than $3 a barrel on Tuesday after Saudi Arabia floated the idea of OPEC+ production cuts to support prices in case Iranian oil returns to the world market and the prospect of US inventories declining.

• Support levels: 1.2967, 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.3006, 1.3090, 1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. Yesterday the price formed a false-breakout zone above the resistance level of 1.3006, which can be used as a selling point now. Buy trades should be considered on the lower time frames from the support level of 1.2967, but only with a confirmation.

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

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).