The Analytical Overview of the Main Currency Pairs on 2022.09.28

The EUR/USD currency pair

• Prev Open: 0.9608
• Prev Close: 0.9592
• % chg. over the last day: -0.17 %

Hedge fund strategists remain bearish on the European currency until the end of the year. The funds’ minimum target is now 0.95, with a high probability of seeing a price of 0.90. This forecast comes from the energy price shocks facing the Eurozone and their negative impact on the industrial sector. The argument is that trade will shift to countries that are better protected from rising energy prices, further weakening the euro. Economic indicators for the eurozone point strongly to a recession as winter approaches, especially in Germany. Another ECB official, Luis de Guindos, said yesterday that the ECB will continue to raise rates in the coming months.

• Support levels: 0.9550
• 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 hour 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 of 0.9808 or 0.9865. Buy trades can be considered from the round level of 0.9550, but only with confirmation in the form of a false breakdown.

Alternative scenario: if the price breaks out through the resistance level of 0.9808 and fixes above it, the uptrend will likely resume.

• – Eurozone ECB President Lagarde Speaks at 10:15 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3);
• – US FOMC Member Bullard Speaks at 17:10 (GMT+3);
• – US Fed Chair Powell Speaks at 17:15 (GMT+3);
• – US FOMC Member Bowman Speaks at 18:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.0678
• Prev Close: 1.0728
• % chg. over the last day: -0.47 %

The UK government is confident in its economic strategy, UK Treasury Secretary Kwasi Kwarteng said Tuesday. Kwarteng also added that they will have a credible plan to reduce debt to GDP. On Nov. 23, the finance ministry will present a “Medium-Term Financial Plan” along with updated growth and borrowing forecasts. At the moment, the British pound is declining because of the rise in the dollar index and because of the new tax cut plan, which will greatly increase the amount of borrowing. Investors have concerns that the UK tax cut is financially unsustainable and could trigger an already rapid rise in inflation, which would eventually require a tighter monetary policy. Now the next step is up to the Bank of England, which promised on Monday not to hesitate to increase the interest rate in order to return inflation to the target level of 2% in the medium term. Analysts thus expect a 125-150 basis point rate hike at the next meeting.

• 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 hour time frame is bearish. The price is currently trading below the moving averages, and sellers’ pressure remains. The MACD indicator is negative, with no signs of a reversal. Sell trades are best to look for on intraday time frames, 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: 144.57
• Prev Close: 144.81
• % chg. over the last day: +0.17 %

The Japanese Yen lost about 75% of the gains made after the currency intervention last week. The price is again approaching the 145 level, which the Ministry of Finance has promised to defend, indicating even more intervention. But analysts believe that the Japanese Ministry of Finance will not intervene again in such a short time. So far, the yen is weakening gradually without volatility bursts, and the Bank of Japan announced an unscheduled bond buying operation, which is a negative sign for the yen.

• Support levels: 143.00, 140.60, 139.61, 138.78, 137.65, 136.80, 135.20
• Resistance levels: 145.35

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite the intervention. The MACD indicator is positive, 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 145.35, but only with additional confirmation.

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

• – Japan Monetary Policy Meeting Minutes (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3733
• Prev Close: 1.3723
• % chg. over the last day: -0.07 %

The head of the Central Bank of Canada said yesterday that the central bank should continue to raise interest rates to fight inflation. Although analysts believe that the decline in inflation in Canada over the last quarter may convince Bank of Canada officials to be less aggressive. It is for this reason that the Canadian dollar is losing ground against the US dollar, as the Federal Reserve is not going to stop. The USD/CAD is also strongly influenced by the dynamics of oil prices. The decrease in oil prices also puts downward pressure on the Canadian dollar.

• Support levels: 1.3614, 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 1.3614. 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.

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