By JustMarkets
Philadelphia Fed President Patrick Harker said Thursday that the central bank has not yet ended its cycle of raising interest rates amid very high inflation, adding that the Central Bank will likely only pause the tightening process next year. Analysts believe that until the difference between US Federal Reserve and ECB interest rates begins to narrow, it is premature to look for a reversal in the euro.
From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. But the price is trading below the moving averages. Indicator MACD has become negative, and the buyers’ pressure is weakening, but active sellers are not observed. Buy trades should be considered from the support level of 0.9752, but with additional confirmation in the form of reverse initiative. Sells may be considered from the resistance level of 0.9848, but also 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.
Unexpected events took place in the UK. Liz Truss announced her resignation as Prime Minister after just 45 days in office, the shortest term ever. Truss faced calls to leave because of the disastrous effects of her mini-budget. The prime minister’s departure provoked a struggle among conservative lawmakers to find a successor. Because of the uncertainty, investors are now advised to avoid speculating about the British pound.
From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. But the price is trading below the moving averages. The MACD indicator has become negative, indicating a weakness of the buyers. Under such market conditions, buy trades can be considered from the support level of 1.1186, but better after confirmation. It is better to look for sell trades on the intraday time frames, and the nearest resistance level is 1.1311.
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Alternative scenario: if the price breaks down of the 1.1094 support level and fixes below it, the downtrend will likely resume.
On Thursday, the yen broke above the key psychological level of 150 to the dollar for the first time since 1990, despite repeated threats by Japanese policymakers to intervene to eliminate excessive volatility in the currency market. The dollar/yen pair’s break above the key level increases pressure on Tokyo to re-enter the foreign exchange market to curb the national currency’s inevitable decline. Especially given that Japan’s consumer inflation has reached a 31-year high.
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 price is trading above the moving average lines. The MACD indicator is in the positive zone, the buyer’s pressure remains, but the divergence is increasing, which indicates a soon corrective movement. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 149.47, but with confirmation. Sell deals can be searched from the resistance level of 150.00, but only with additional confirmation in the form of a reverse initiative or a false breakout.
Alternative scenario: If the price fixes below 147.67, the downtrend will likely resume.
Economists expect the Bank of Canada to continue its aggressive campaign to raise rates after higher-than-expected inflation data. Bank of Montreal’s chief economist expects 75 basis points (bps) increase next week. The move will raise the overnight rate to 4%. In addition, he predicts a 25 basis point hike in December. The deputy chief economist at CIBC also predicts a 0.75% rate hike.
From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of moving averages. The MACD indicator has become inactive, forming a wide sideways. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3677 but better after confirmation. For selling, it is better to consider the resistance level of 1.3786, 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.
By JustMarkets
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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