The Analytical Overview of the Main Currency Pairs on 2022.09.29

The EUR/USD currency pair

• Prev Open: 0.9595
• Prev Close: 0.9734
• % chg. over the last day: +1.48 %

The euro broke a five-day losing streak. ECB spokesman Holzmann said yesterday that a 50 basis point interest rate hike is the minimum to be considered at the October meeting. The ECB is ready to raise the rate above the neutral level of 2%. The ECB’s Rehn yesterday indicated that the bank needs a significant interest rate hike in October by 75 or 50 basis points. Another ECB spokesman Kazimir pointed out that next year will be much more difficult than this, and high inflation is likely to persist for a long time.

• Support levels: 0.9641, 0.9601
• 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. But yesterday, the price formed a false breakdown zone. The MACD indicator became positive, and there is pressure from buyers. It is better to look for sell deals from the resistance level of 0.9808 or 0.9865. Buy trades can be considered from the level of 0.9641 or 0.9601, but only with confirmation.

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

• – Eurozone Spanish CPI (q/q) at 10:00 (GMT+3);
• – Eurozone German CPI (q/q) at 15:00 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US FOMC Member Bullard Speaks at 16:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US FOMC Member Mester Speaks at 20:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.0725
• Prev Close: 1.0882
• % chg. over the last day: +1.46 %

The sharp rise in long-term UK government bond yields prompted the Bank of England to intervene, easing investor fears. The Bank of England plans to buy as many government bonds as necessary to stabilize markets. The Central Bank explained that if yields rise higher, it could lead to an unjustified tightening of funding conditions and reduce the flow of credit into the real economy. In other words, higher government bond yields could cause a credit crunch, making it harder and more expensive for households and businesses to borrow money. The bank said in a statement, “the Bank of England’s Financial Policy Committee recognized the market risks, recommended an intervention, and proposed a plan to buy bonds as a matter of urgency.” At the same time, the Bank of England will postpone the start of its quantitative tightening program (QT).

• Support levels: 1.0709, 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 trading above the moving averages, and the balance is starting to form. The MACD indicator has become positive, indicating some buying pressure. Under such market conditions, it is best to look for sell trades on intraday time frames, the nearest resistance level is 1.1021. Buy trades can be considered from the support level of 1.0709, 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: 144.76
• Prev Close: 144.10
• % chg. over the last day: -0.45 %

The Bank of Japan kept interest rates unchanged, controlled the yield curve, and pointed to the need to maintain a strong easing policy. The pandemic program was extended for 3-6 months, depending on how loans were made. The difficulty for the BoJ is that the dollar index has fundamental support from the US Federal Reserve by aggressively raising interest rates. As a result, the diametrically opposite policies of the US and Japanese Central Banks contribute to the growth of USD/JPY quotes.

• 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 last week’s intervention. The MACD indicator has become negative, and there is slight selling pressure. Under such market conditions, buy trades can be sought on intraday time frames from a support level of 143, but with confirmation. Sell deals can be considered 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.

The USD/CAD currency pair

• Prev Open: 1.3721
• Prev Close: 1.3604
• % chg. over the last day: -0.86 %

The Canadian dollar is a commodity currency, so it is highly dependent on the dynamics of the dollar index and oil prices. The dollar index declined yesterday, while oil prices rose on an unexpected drop in oil and fuel inventories in the United States. As a result, the Canadian dollar strengthened sharply yesterday. The Bank of Canada is holding rates at the same level as the US Fed, so the Canadian dollar will be the first currency to strengthen once the dollar is not rising.

• Support levels: 1.3611, 1.3545, 1.3453, 1.3297, 1.3212, 1.3053, 1.2990, 1.2958
• Resistance levels: 1.3755, 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 became negative, and the price fell below the moving averages. This indicates some selling pressure and a possible correction. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3611 or 1.3545. For sell deals, it is better to consider the resistance level of 1.3755, 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.

• – Canada GDP (m/m) at 15:30 (GMT+3).