The Analytical Overview of the Main Currency Pairs on 2022.09.27

The EUR/USD currency pair

• Prev Open: 0.9673
• Prev Close: 0.9601
• % chg. over the last day: -0.75 %

Yesterday, ECB head Christine Lagarde said that the Governing Council would continue to raise interest rates at its next meetings even if the economic outlook worsens. According to ECB officials, inflation is becoming more widespread, and supply constraints continue to cause price pressures. Higher energy and food prices are weighing on the most vulnerable, and the situation is expected to worsen further in winter. The IFO Institute said Germany’s business climate index fell to 84.3 from 88.6 in August. The decline was evident in all four sectors of the German economy, adding that pessimism has increased significantly in the coming months.

• Support levels: 0.9600
• Resistance levels: 0.9808, 0.9865, 0.9949, 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages, and sellers’ pressure is still high. The MACD indicator is negative, but divergence can be seen in several timeframes. It is best to look for sell trades from the resistance level at 0.9808 or 0.9866. Buy trades can be considered from the round level of 0.9600, but only with confirmation.

Alternative scenario: if the price breaks out through the resistance level of 0.9949 and fixes above it, the uptrend will likely resume.

• – US Fed Chair Powell Speaks at 14:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 14:30 (GMT+3);
• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – US FOMC Member Bullard Speaks at 16:55 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.0796
• Prev Close: 1.0686
• % chg. over the last day: -1.03 %

The pound fell nearly 5% to a historic 40-year low after the UK government promised further tax cuts, heightening fears that the new fiscal policy will lead to a sharp rise in inflation and debt. Investors now view the UK as an emerging market. At the same time, experts believe that the pound could fall even more. The pound’s sell-off increases the likelihood that the Bank of England will have to raise interest rates even more aggressively. Traders expect an unprecedented 125-point hike at the Bank of England meeting in early November. “The Bank is watching financial markets very closely in light of the significant revaluation of financial assets,” Bank of England Governor Andrew Bailey said in a statement.

• Support levels: 1.0578, 1.03
• Resistance levels: 1.1021, 1.1210, 1.1449, 1.1626, 1.1693, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is currently trading below the moving averages, and sellers’ pressure remains. The MACD indicator is deeply negative, with no signs of a reversal. Sell trades are best to look for on intraday time frames, and the nearest resistance level is 1.1021. Buy trades can be considered from the support level of 1.0578, but only with confirmation and short targets.

Alternative scenario: if the price breaks out of the 1.1210 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 143.60
• Prev Close: 144.64
• % chg. over the last day: +0.72 %

Bank of Japan Governor Kuroda said yesterday that Japan’s economy is gaining momentum and continues to recover. At the same time, the head of the Bank noted that the Central Bank would continue to adhere to the soft monetary policy. According to analysts, the Japanese yen will now trade in a wide price range of 140-145 since, on the one hand, the opposite monetary policy of central banks in the US and Japan will put upward pressure on USD/JPY quotes. On the other hand, the Ministry of Finance of Japan promised to defend the level of 145 with the help of currency interventions.

• Support levels: 143.00, 140.60, 139.61, 138.78, 137.65, 136.80, 135.20
• Resistance levels: 144.27, 145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite the intervention. The MACD indicator has become positive, and the price is trading above the moving averages. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 143, but with confirmation. Sell deals can be sought from the resistance level of 145.00, but only with additional confirmation.

Alternative scenario: If the price fixes below 140.60, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3597
• Prev Close: 1.3732
• % chg. over the last day: +0.99 %

The Canadian dollar continues to lose ground as the dollar index rises and oil prices fall. Oil prices are declining amid expectations of new sanctions against Russia and the news that the US is planning to supply more than 1 million barrels of oil daily to Europe to replace supplies from Russia. Analysts are confident that when the US dollar’s uptrend reaches its end, the Canadian will be among the few currencies to reverse sharply as the Bank of Canada holds one of the highest interest rates.

• Support levels: 1.3662, 1.3545, 1.3453, 1.3297, 1.3212, 1.3053, 1.2990, 1.2958
• Resistance levels: 1.3858, 1.3968

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, there is buying pressure, but the divergence is increasing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3662. For sell deals, it is best to consider the resistance level of 1.3858 or 1.3968, but only after the additional confirmation.

Alternative scenario: if the price breaks down and consolidates below the 1.3297 support level, the downtrend will likely resume.