The Analytical Overview of the Main Currency Pairs on 2022.08.25

The EUR/USD currency pair

• Prev Open: 0.9966
• Prev Close: 0.9967
• % chg. over the last day: +0.01%

Dutch gas prices, the European benchmark, rose again on Wednesday as the prospect of a Nord Stream 1 supply cut kept investors on edge. Russia’s state energy company Gazprom said on Friday that Russia would suspend natural gas supplies to Europe via Nord Stream 1 for three days due to unscheduled maintenance. The spike in gas prices continues to pressure the region’s economy and the European currency in particular. Also, the difference in interest rates between the US Federal Reserve (2.5%) and the ECB (0.5%) affects the decrease in the quotes.

• Support levels: 0.9932
• 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. The price is now forming a wide balance. The MACD indicator has become positive, and buying pressure prevails. Under such market conditions, buy trades are best to be sought on intraday time frames from the support level of 0.9932, but with confirmation. Sell trades can be considered from resistance levels of 0.9996, but only after additional confirmation, as the level has already been tested twice.

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

• – Eurozone Germany GDP (q/q) at 09:00 (GMT+3);
• – Eurozone Germany Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting at 14:30 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – Jackson Hole Symposium at 16:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1825
• Prev Close: 1.1791
• % chg. over the last day: +0.29%

Traders are betting that the ECB and Bank of England will be forced to take bolder action to rein in rising prices. Markets have increased bets on a rate hike for the Bank of England, betting that interest rates will rise to 3.5% by the end of the year. The option model shows a 60% chance that the pound will fall to $1.14 by the end of the year, the lowest level since 1985. The economy is approaching recession, energy prices continue to skyrocket, and uncertainty about who will be the next prime minister are all factors creating a bearish mood for the British currency.

• 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. The price is now forming an accumulation zone. The MACD indicator has become positive, and sellers’ pressure has slightly decreased, but 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 1.2000 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 136.76
• Prev Close: 137.12
• % chg. over the last day: +0.26%

Bank of Japan board member Toyoaki Nakamura said on Thursday that a new surge in pandemic cases clouds Japan’s economic outlook, continued supply constraints, and a steady rise in global commodity prices. So the Bank of Japan should maintain a large-scale stimulus to support the economy. Nakamura said that market worries about aggressive interest rate hikes by major central banks to curb inflation could also trigger capital outflows from emerging economies and hurt global growth.

• Support levels: 135.89, 135.35, 134.23, 133.47, 132.27, 131.08, 130.85
• Resistance levels: 137.01, 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 have corrected to the levels of the moving averages and are forming a balance. Under such market conditions, buy trades can be sought from the support level of 135.89 or 135.35, but with additional confirmation. For sell deals, traders can consider the resistance level of 137.01, 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: 1.2955
• Prev Close: 1.2971
• % chg. over the last day: +0.12%

The US Energy Information Administration reported a 3.3 million barrel drop in crude oil inventories last week. The Canadian dollar is a commodity currency that highly depends on oil prices. Also, yesterday it became known that the OPEC countries will fight the low oil prices, and if Iranian oil comes back to the world market, OPEC is ready to cut its production not to let the oil prices fall drastically. Therefore, the Canadian dollar, in addition to monetary tightening by the Bank of Canada, also has fundamental support in keeping oil prices from falling.

• Support levels: 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.2998, 1.3016, 1.3090, 1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading at the levels of the moving averages, with the sellers’ pressure temporarily prevailing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2900, but only with confirmation. For sell deals, it is better to consider the resistance level of 1.2998.

Alternative scenario: if the price breaks down and consolidates below the 1.2900 support level, the downtrend will likely resume.