The Analytical Overview of the Main Currency Pairs on 2022.10.18

The EUR/USD currency pair

• Prev Open: 0.9720
• Prev Close: 0.9832
• % chg. over the last day: +1.15 %

Joachim Nagel, the ECB representative and president of Deutsche Bundesbank, said in his speech that inflation in the Eurozone is peaking, and in 2023 the inflation rate will probably decline gradually. However, a lot will depend on energy prices, and if oil and gas prices go back up, it could trigger a new wave of inflation in the Eurozone. Nagel also added that further rate hikes should be expected at the next ECB policy meetings.

• Support levels: 0.9752, 0.9701.
• Resistance levels: 0.9856, 0.9961, 1.0058, 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 bullish. The price is trading above the moving averages. The MACD indicator is positive again, and the pressure on buyers remains. Buy trades should be considered from the support level of 0.9752, but with additional confirmation in the form of reverse initiative. Sell deals may be considered from the resistance level of 0.9856, but only with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9666 and fixes below it, the downtrend will likely resume.

• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1229
• Prev Close: 1.1347
• % chg. over the last day: -1.41 %

The British pound rebounded moderately yesterday after the repeal of the tax measures. New British Chancellor Jeremy Hunt canceled most of the unfunded tax cuts in the new mini-budget. The failed mini-budget of Hunt’s predecessor, Kwasi Kwarteng, shook the market and caused the pound to fall to an all-time low against the US dollar. The Treasury Department issued a statement explaining that the rejection of the tax measures would raise £32 billion. The head of research, Quilter Cheviot, argues that the move restored confidence in the British government. In addition, the mini-budget change should allow the Bank of England (BoE) to raise interest rates without being too aggressive.

• Support levels: 1.1307, 1.1186, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1381, 1.1478, 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 bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, but there is a divergence, which indicates the weakness of the buyers. Under such market conditions, buy trades can be considered from the support level of 1.1307, but better after confirmation. Sell trades are better to look for on the intraday time frames, and the nearest resistance levels are 1.1381 and 1.1478.

Alternative scenario: if the price breaks down of the 1.1094 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 148.57
• Prev Close: 149.02
• % chg. over the last day: +0.30 %

The Japanese yen fell to a 32-year low against the US dollar. The Bank of Japan (BoJ) reiterated its efforts to ease monetary policy, and Governor Haruhiko Kuroda promised to keep interest rates ultra-low to support the fragile economy. The divergent policy between the US Fed and the Bank of Japan “pushes” USD/JPY quotes up. Still, investors should not rule out new currency interventions by the Ministry of Finance of Japan, as discontent among the population is growing due to the depreciation of the national exchange rate. Japan’s Chief Cabinet Secretary Matsuno said he would take appropriate measures to deal with excessive currency movements.

• Support levels: 147.67, 146.21, 145.93, 144.91, 144.16, 143.00, 140.60, 139.61
• Resistance levels: 149.02, 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving levels. The MACD indicator is in the positive zone, and the buyers’ pressure remains. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 147.67, but with confirmation. Sell deals can be searched from the resistance level of 149.02 or 150.00, but only with additional confirmation in the form of a reverse initiative.

Alternative scenario: If the price fixes below 145.95, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3870
• Prev Close: 1.3714
• % chg. over the last day: -1.14 %

Consumer confidence in Canada has fallen to a record low, raising the possibility of a recession. The index hit 44.4 last week, a level it has only surpassed twice at the height of the Covid-19 pandemic in 2020 and during the global financial crisis in 2008. The worsening sentiment calls into question the ability of Canadian consumer spending to continue to drive the country’s economic growth. Many economists have already begun forecasting a moderate contraction next year with the likelihood of an even bigger downturn. 77% of Canadian firms expect inflation above 3% over the next two years.

• Support levels: 1.3677, 1.3619, 1.3583, 1.3535, 1.3454
• Resistance levels: 1.3795, 1.3858, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. But the price is trading below the moving lines. The MACD indicator is negative, but there is a divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3677, but after confirmation in the form of an impulse initiative. For sell deals, it is better to consider the resistance level of 1.3795, but only after an additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3677, the downtrend will likely resume.