The Analytical Overview of the Main Currency Pairs on 2022.08.26

The EUR/USD currency pair

• Prev Open: 0.9963
• Prev Close: 0.9973
• % chg. over the last day: +0.10%

The US GDP contraction in the second quarter was revised to 0.6% from 0.9%. Weekly jobless claims fell by 2,000 to 243,000. Thus the US labor market remains strong, and the economy is contracting, but not as fast as originally anticipated. All these signs give the US Federal Reserve the room to raise interest rates further aggressively.

• Support levels: 0.9941
• 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. In the run-up to the Fed head’s speech, volatility has decreased, and the price forms a balance. The MACD indicator has become inactive. Under such market conditions, buy trades are best to be sought on intraday time frames from the support level of 0.9941, 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.

• – US PCE Price index (m/m) at 15:30 (GMT+3);
• – Jackson Hole Symposium at 16:00 (GMT+3);
• – US Fed Chair Powell Speaks at 17:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1791
• Prev Close: 1.1835
• % chg. over the last day: +0.37%

Economic observers are warning of a harsh winter in the UK as utilities prepare for an unprecedented increase in energy bills in October, followed by another increase in January. The British pound is under pressure for three main reasons: the energy crisis, the interest rate differential between the US Fed and the Bank of England, and policy uncertainty.

• Support levels: 1.1787, 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 inactive, and the 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 or 1.2000, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1787, 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: 136.99
• Prev Close: 136.50
• % chg. over the last day: -0.36%

“Moving to tighten monetary policy when demand remains inadequate to supply will hurt Japan’s economy and be a major constraint on households and business activity,” a Bank of Japan official said yesterday. According to policymakers, although core consumer inflation is slowly accelerating due to rising energy, food, and durable goods prices, such growth is likely to dissipate by the end of the year. For this reason, the Bank of Japan continues to maintain an ultra-soft monetary policy while other central banks worldwide are raising interest rates.

• 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 has corrected to the levels of the moving averages 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 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.

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2966
• Prev Close: 1.2922
• % chg. over the last day: -0.34%

Oil prices declined on Thursday due to volatile trade as investors prepare for the possible return of sanctioned Iranian oil exports to global markets and fears that rising US interest rates will dampen fuel demand. On the other hand, the prospect that the OPEC+ producer group may limit oil supplies limits the fall in oil prices. The Canadian dollar is a commodity currency, so it is highly dependent on indicators such as the dollar index as well as oil prices. Fundamentally, traders should not expect any medium-term trends in the currency pair USD/CAD.

• Support levels: 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.2985, 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 1.2985.

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